Renovation Lending: What Can It Do For You?

 

The world of renovation lending isn’t a one size fits all type of business. Each loan is customized for each client’s individual needs. I wanted to take a moment to show you some examples and give you a brief overview of some of the loans that I offer.

First of all just to clear up a common myth, renovation loans are not just for short sales or foreclosed properties.  These loans can be used for ALL properties and can be used for a purchase or a refinance!

Remember not only can the loan be customized but the use of it can also be customized. What do I mean by this? Well let’s say you are selling a home in need of repairs and you can’t make them yourself – marketing the home as FHA 203k eligible is the solution!!  Maybe you are in the market to purchase a new home and just can’t find the “perfect, move in ready one.”  Well once more purchasing using the FHA 203k loan or Fannie Mae HomePath loan will allow you to purchase plus finance the cost of the repairs/renovations.  Just because a home is a bit outdated doesn’t mean it won’t have a good bone structure so don’t just walk away when these loans are here to help!

This home closed with missing windows, a damaged HVAC, an out of date electrical system and foundation issues!  Purchase price was $111,000, total renovation was $54,200 and after improved value was $265,000.  After closing all the required repairs were made and as you can image the homeowner made some elective repairs as well.  There is no better time to renovate a home than before you move in!!

What if the home is priced above the FHA loan limit but you still want to purchase and renovate? We can use the conventional loan called the Fannie Mae HomeStyle loan. But it’s not just for this…sometimes you want to get out of mortgage insurance so with a 20% down payment you can.

Renovation loans are not just for home in need of repair…they are also useful to take a perfectly good home and customize it to your liking.  In some cases just a fresh coat of paint or new carpet makes all of the difference.  On that note, don’t forget just because you already own the home doesn’t mean you can’t refinance using one of these programs too.  Let’s face it sometimes it’s just easier to remodel than to move altogether.  Refinance using an FHA 203k loan or a Fannie Mae HomeStyle loan to possibly lower your current rate and finance the costs of the renovation.

Here is a perfect example of a home that is in great shape but just needed the new owner’s finishing touch.  The home was purchased for $153,000 and after all of the improvements it appraised for $170,000.  The buyers financed about $16,000 worth of upgrades to replace fixtures, update the kitchen counters and do some minor exterior repair.  Using the FHA 203k streamline loan they were able to accomplish this in under 30 days!!

Let’s not forget about the HomePath loan that doesn’t have mortgage insurance. Sure it’s the only one of the bunch specific to Fannie Mae foreclosures but it and HomeStyle allow for investors!!

Clearly there are a lot of options and it’s my job to not only help you find the correct loan but walk you through the steps. Working with a renovation loan specialist is the key to making this a successful transaction. Call me today and let’s talk about the loan that would be best for you.  Find out what Renovation Lending can do for you!