Marysville couple buys, renovates a home with help from little-used loan program

By Mike Benbow Herald Writer

MARYSVILLE — For some time, Larry Iverson had been looking for a fixer-upper.

But as home prices continued to climb, even places with serious problems were priced out of Iverson’s reach. And land values rose to the point where builders were knocking down smaller, older homes to make way for new construction.

“You couldn’t find houses under $250,000,” Iverson said.

Iverson and his wife, Liya, eventually gave up their hopes for buying a conventional home and purchased a manufactured one.

Then the recession hit.

“Prices went down and we started looking again,” Larry Iverson said.

With all the repossessed and bank-owned homes on the market today, there suddenly were a lot more choices.

Some of those choices weren’t all that exciting. People without jobs, or who were upside-down on their mortgages, had stopped paying for maintenance or had stripped the homes of many of their valuables.

“We found one place where the previous owner had taken out all the cabinets, the carpet and even the water heater,” Larry Iverson said.

The Iversons had about $12,000 saved up, not enough for a down payment, repair work and new furnishings. Larry Iverson also wanted the protection of a Federal Housing Administration loan, but was being steered away by real estate agents who advised he wouldn’t want to deal with all the paperwork.

Then he found information on exactly what he wanted on the Internet: an FHA loan with a relatively low down payment that also includes money for the repairs you’re not qualified to do yourself. It’s called an FHA 203K renovation loan.

Only some banks are qualified by the FHA to administer the loan, and Larry Iverson said he sent e-mails to all of them in the region seeking more information. Only one responded, Kevin Hassan of the HomeStreet Bank branch in Marysville.

Hassan said the underused loan program is perfect now because of the large number of repossessed or bank-owned homes on the market.

“Foreclosures have just been rampant,” he said. “It’s the worst I’ve seen since the 1970s.”

The Iversons ended up finding a small home they liked in downtown Marysville last year and were able to buy it for $164,000. It needed a lot of work: The roof had to be shored up and reshingled, the foundation required additional piers to brace up the floors, and the front steps needed railings.

The back porch was replaced with a deck. And some soil was added so that the property sloped away from the foundation, not toward it. Damaged siding was replaced and some insulation was added. Gutters were installed.

A couple of new appliances were also needed.

Larry Iverson, an inspector for the Snohomish County housing authority, had done remodeling work in the past. He did a lot of the work on his new home himself and hired some professionals to prop up the foundation, work on the roof and install gutters.

“The house had been rewired and replumbed before I bought it,” he said, adding he did upgrade the electrical system for the used clothes dryer he installed.

Hassan said the loan allows buyers to do smaller repair jobs themselves. A contractor is hired for work expected to cost more than $35,000 or things that require special skills, he said.

“If you need some electrical work, you need to hire a licensed electrician,” he said. “But if you have some experience, you can do minimal remodeling.”

Hassan said the loan program rolls all the financing into one package, with either a fixed or adjustable loan and a 3.5 percent down payment. FHA provides mortgage insurance, he added.

Typically, the appraiser will value the home based on completion of the renovation work. The work must start within 30 days from the loan’s approval date and be done after four months.

“If you tried to buy this house any other way, it would provide a heyday for an appraiser with all these problems,” Hassan said. “The buyer would have to come in with a lot of cash.”

Larry Iverson said that’s something he didn’t have. And he expects a lot of other people are in the same boat. He said he spent a lot of time both choosing the right place and fixing it up.

“We looked at a lot of places that needed to be fixed up,” he said. “We drove by about 40 houses.”

Iverson encourage others to look at a renovation loan.

“A lot of it, a person can do himself,” he said. “There are a lot of good instruction books out there.”