THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Saturday, September 7, 1996 TAG: 9609060405
SECTION: REAL ESTATE WEEKLY PAGE: 3 EDITION: FINAL
TYPE: Cover story
SOURCE: BY GINGER ADAMS, SPECIAL TO REAL ESTATE WEEKLY
LENGTH: 104 lines
Gum Bridge Road in Pungo is home to the Tatems. Lots of Tatems. The rural Virginia Beach area has been in the family since great-grandfather J.T. Tatem moved into the area to farm.
His original estate was divided among the children, and they in turn passed it to their offspring.
When J.T.'s son Benjamin passed away in October, his possessions were auctioned off by out-of-state family members. Fortunately, the highest bidder on the house retracted the offer, which gave Benjamin's granddaughter, Dottie Miller, an idea - and an opportunity.
Despite owning another two-year-old home, she was compelled to buy the Pungo house for herself and her son. With the help of the Federal Housing Administration's 203(k) loan and the physical labor of the other family members, she is getting a house in ``like-new'' condition with family history, not to mention built-in equity.
To Miller and her family, the cozy Gum Bridge Road home brings back childhood memories of freshly baked biscuits every morning and clan gatherings at every holiday. In a sense, they all grew up in the house. And in their eyes, to see a stranger move into the house next door and across the street from them would have been like selling a piece of the family.
``It was unreasonable to try to bid on the house (at the auction), because I would have needed $12,000 down on the spot,'' recalled Miller. ``But when the buyers changed their mind about the house, I called a friend who is a Realtor. They told me about the 203(k) loan. Then I talked to an attorney friend who knew about the loans.''
Miller was referred to Ellen Ailsworth, manager of the 203(k) department for National Mortgage.
The Tatem house situation is a prime example of what the FHA's 203(k) loan was created to accomplish. ``The objective of the 203(k) loan is to rehabilitate and restore the housing stock of America,'' explained Ailsworth. ``With the growing awareness in the community and a more efficient loan process, the 203(k) loan is becoming increasingly popular in all regions of the country.''
As long as a house requires at least $5,000 worth of repairs, the loan is available for owner-occupants, investors, non-profit organizations, or first-time home buyers. It can be used for any one-to-four-family dwelling (small apartments, in other words), including those that are VA and HUD real estate-owned.
Eligible work includes additions, kitchen or bath remodeling, replacement of the heating, HVAC (heating and air-conditioning), plumbing or electrical systems, structural alterations, or upgrading for energy conservation.
``With the 203(k) you can add a bedroom or completely remodel or rebuild a home destroyed by disaster or fire,'' Ailsworth said. ``You can put on a new roof, install new carpet or vinyl, and, after the minimum $5,000 repairs, paint the interior and exterior, and even have new appliances or a deck or fence.''
Danny Fincham, a private 203(k) plans reviewer, came out to assess the home prior to the loan. ``It was functionally obsolete,'' he said. ``The bathroom was right next to the kitchen, with no direct access from the bedrooms. The house had major termite infestation, especially in the rear. And there was standing water under the house.''
Access to three of the four bedrooms was only from another bedroom, and there was only one closet among them.
Modern homes must be practical and follow certain floorplan guidelines, unlike homes in the past. The age of the house is a mystery. Miller knows that it was built and used as a store on Pleasant Ridge Road, then moved to its present location in 1938.
Miller, a single mother, says she would not have attempted such an arduous project without the generous help of her family. She and her father were approved as the general contractors. Her brother hung the blue board (prior to plastering the walls).
A cousin did the plastering. Her brother-in-law did all the plumbing. In fact, the only help she needed outside the family was the electrician and the HVAC contractor.
The house had discolored green siding that needed to be removed. ``I remember when the green aluminum siding was put on when I was young,'' Miller said. ``Under it we found asbestos roll, and underneath that was lap board, painted bright yellow.''
Thirty percent of the house - in the rear - had to be demolished. Rebuilding the section added approximately 200 square feet to the total area.
The sales price for the existing structure was $52,000. Prior to Miller's closing, an appraiser estimated the planned improvements would bring the house's value to $95,100. Her loan for the house plus the contracted work came to only $85,000, automatically building in over $10,000 equity when the house is finished.
After just five months, Miller is now seeing the finishing touches being added. She plans to move in by mid-September.
``It went so smoothly!'' she said. ``I thought it would be worse (than a conventional loan) because it was much more involved. It was easy because Ellen specializes in these loans. There was no hassle, no negotiations.''
``If you want to find a good value for your money, buy a house that needs fixing up, use the 203(k) loan to rehabilitate it, and you'll have a like-new property with built-in equity. It's a solid investment in unstable economic times.'' ILLUSTRATION: Color cover photo by Mike Heffner
With the help of a federal loan, Dottie Miller and her father, Tommy
Tatum, plan to renovate their nearly 60-year-old Pungo home.
Color photos by Mike Heffner
J.T. Tatem's descendents provided much of the labor; the FHA backed
the loan to rehab the family home in Pungo.
Dottie Miller and her son are now awaiting the finishing touches
before moving into the refurbished house this month. The entire
jobs took about five months. by CNB