Renovation Mortgage Loans in Texas are great tools for buyers and sellers alike. They open the door for a buyer to purchase and then renovate a home to their liking. They also allow a seller to sell the home “as is” which then prevents the seller from doing a lot of unnecessary repairs/upgrades prior to selling. I use the term broadly here because the loan is as specific as the work to be done to the home.
For example, those wishing to simply add granite counter tops to the kitchen and new carpet to the bedrooms might just go with the FHA 203k streamline loan since these are just minor cosmetic updates. However those wishing to add luxury items such as an outdoor kitchen or pool would want to use the Fannie Mae HomeStyle renovation loan.
Another big issue that comes up in Texas a lot is foundation issues. Not to fear, the FHA 203k full version will allow for foundation repair! It also allows for anything structural such as room additions or garage conversions.
These days with homes flying off of the market as quickly as they are it is important to know that these loans exist. Just because a home was previously owned doesn’t mean it is at the end of its life. Most of the time it just means it needs a little TLC.
Let’s talk about the renovation piece for moment. I can’t stress enough not to overdo it for the neighborhood. Remember the appraisal is based on the after improved value. This is important to keep in mind because the appraiser is supplied with a copy of the bid. If he/she cannot get value to support the work being done then the only option is to reduce the bid to meet the appraised value.
An appraisal of after improved value is necessary on all renovation loans. Even if you are purchasing a HUD owned property you will need a new appraisal.
What can help with value? First of all, working with a general contractor is a key item. Also one that is local and familiar with the area is a plus. When looking at items that are to be done to the home, remember you don’t always get dollar for dollar. What really adds value is improving and upgrading the home.
What to do if the home does not meet value? Well, believe it or not there is actually an option. The full version of the FHA 203k loan actually allows you to finance up to 110% of the after improved value. This has been very useful in areas of Texas that have a lot of foreclosures and it’s just hard to get value. We have also had instances where the subject property will be the most improved on the block so having this option is a great asset.
The final point I wanted to touch on is using a Renovation Mortgage Loan to sell a home. I mentioned earlier how hot the market is today. While purchasing a brand new home would be great for everyone it’s just not realistic. As a seller of an existing home, how great would it be as a sell with minor foundation issues or maybe carpet that has run its course?
As you can see there are a lot of options when it comes to renovation loans. There are options for Conventional to FHA and from large to small projects. Just as you will customize the home to your needs I will customize the loan accordingly. Contact me today and learn more about the Renovation Mortgage Loans in Texas.