Helen Heenan bought a 19th-century house on the 400 block of East Wildey Street in Fishtown in 2013. It was uninhabitable at the time. Using an FHA program called 203k, Heenan was able to finance both the acquisition of the property and nearly all of a total renovation.
A native of Port Richmond, Heenan has lived on and off in Fishtown for nearly 20 years. First, she was renting houses with roommates, and then, after a stint working in Ireland and attending business school in London, she finally bought her own Philadelphia house in 2005.
That house was down the block from her current place on East Wildey, a serious fixer-upper she bought for roughly $175,000. Several buyers had come close to purchasing the property but were scared off by the additional $100,000 or more needed for a gut renovation.
Not Heenan. Luckily, she was working as an accountant for a local architectural firm and had become familiar with the advantages of financing through 203k loans. Through the Federal Housing Administration, buyers can finance the purchase of a run-down house with a 203k. The federal government designed these loans to encourage lenders to fund riskier purchases, with the goal of neighborhood revitalization.
In order to qualify, homeowners must plan to live in the house. There's a time limit and a few caveats: the FHA 203k loan amount must include the price of the house plus the expected cost of repairs.
Labor costs must be included in the loan, even if the homeowner performs the repairs, so any contractors have to agree to be paid through the 203k loan. And the repairs must be completed within six months.
In the end, Heenan received a $295,000 FHA 203k loan. Palmer Construction Management received payments in tranches after a 203k loan officer inspected completed work. Homestead Funding Corp. in New York was Heenan's 203k loan servicer.
"After the 203k specialist inspects the work, they OK payment to the bank, which releases the money to the general contractor," Heenan said. That payment is known as the "draw."
Heenan hit a snag after buying the house: Her backyard wasn't technically on the deed. After submitting architectural plans, she and her broker, Michael Garden of Cityspace, had to work with local zoning authorities to receive the necessary permits.
"Initially, zoning said my yard didn't belong to me, even though my neighbors and I all have identical properties" along Wildey Street. After pleading her case, she successfully argued she wasn't making the house larger, just safer.
Heenan also got a price break by hiring her cousin at Premier Concrete & Stamping in the Northeast to do her concrete floors and countertops. She installed a remote-controlled thermostat under the brand name "The Nest," which can operate via iPhone and can be set up for about $200. Her completely new IKEA kitchen cost $7,000 during a 20 percent off sale.
"The IKEA measuring and installation service is extra, but it is totally worth it," she said.
She also employed artisans from Philadelphia Woodworking for her vanities and bathroom shelves.
Heenan's other passion was documenting the renovation on her personal blog (http://412riverside.blogspot.com), where she was able to vent frustrations and celebrate progress on the 1880-era house.
The original spiral staircase, clawfoot tub, and marble mantle were design highlights that made for some great photos. She filled out the backyard with tomato vines, reclaimed a brick patio, and placed plants she bought on clearance.
"I call my style organic modern," she said.
And why the name for the blog address?
"The house is located on the river side of Girard Avenue."
There were hitches: Heenan moved into the house in February, though the construction was not complete. She had rented out her other house, so the contractors fixed up one bedroom for her and her faithful "chug" dog, Ozzie, while they finished.
"There wasn't electricity or hot water until the end of February, but we managed," she said.
Her advice for other 203k borrowers?
"Don't be afraid of it. The general contractor puts in a draw to the 203k loan servicer, and that's a really good thing because it protects you."
If you're looking at a fixer-upper, a 203k loan could be the mortgage for you. For a list of lenders approved by the U.S. Department of Housing and Urban Development for 203k loans, visit the agency website, http://www.hud.gov.