If you can’t find your dream home, why not make your own?
In today’s housing market, it can be very difficult to find a home that you love at a price that you can afford. Commonly, as soon as a house that has been “done right” goes onto the market, it finds a buyer and comes right off. A lot of home buyers can easily get frustrated by this fact and settle for something less than they initially desired.
But, did you know that there are MULTIPLE home purchase renovation programs available right now?
If you can’t find the perfect house, it may be a lot easier to find one with the perfect potential! These programs allow you to purchase the home, and then finance the cost of renovating the home AT THE SAME TIME. There really is no better way to end up in a home that is exactly what you want. Some home buyers shy away from these because they don’t want to go through the headache of fixing up their own home, but that’s another part of the beauty of these programs. Financing approval will include getting the plans and the contractor approved, and here at the Heights, we will help you with all of it. Best of all, the contractor is paid by the bank and won’t get paid in full until the work is done and passes inspection. Many of our renovation buyers tell us that the experience was almost as simple as a regular mortgage transaction!
Apply now and we can begin the journey to your dream home together!
- Get up to $30,000 for work on the house that you are buying
- Can include some furnishings
- Great, 30 year fixed rates
- Credit scores down to the mid 600s
- We are here to walk you through all of the scary parts
What our clients have to say about us
If, Mitch is involved, I know my clients will be guided in the direction needed to reach their dream of home ownership. Thank you.
Michelle Siebott CornwellLicensed Realtor
Mitch was very helpful in working through a difficult mortgage loan for a mutual client. He was instrumental in keeping the deal together.
Marc WoodsReal Estate Consultant at RE\MAX
I would definitely recommend Mitch! You can trust this guy! I would not hesitate to do business with him any time in the future!
Marilyn WardDragonward Miniature Schnauzers
Call now and start your path towards financial freedom!
What follows is a complete guide about renovation home loans (also known as fixer-upper or rehab loans). Different types of loan products, their advantages, dis-advantages, ease, time-line, requirements, that offer financing towards purchase and renovation at the same time. Estimated read time 4-5 minutes.
Renovation Home Loans – July 2020 Updates – Different kind of renovation loans and their pros n cons:
Quick scroll links:
- What Is A Renovation Home Loan?
- What Makes Renovation Loans So Popular?
- Do Your Homework Right
- How Long Does It Take For Approval?
- 3 Type Of Renovation Loans?
- Comparison FHA 203K Loans vs HomeStyle Loan
- Summarizing Home Renovation Loans
What Is A Renovation Home Loan?
Renovation home loans are also commonly known as rehab loans or upper-fixer loans. This is a single loan but actually serves two purposes:
- Covers the purchase of the property
- Additionally, sets aside funds to be used for remodeling your home
You make one mortgage payment for renovation loans. It is a great option for someone who wants to purchase a home and perform upgrades, repairs, remodel or customize to their needs and wants.
Let me take an example to illustrate this. Say you are interested in a foreclosed property which has been sitting in the market for years. This kind of property has absolutely no competition. Means you can purchase it at great price, even 30-35% off market price in some cases. In numbers, A 200K house might cost you approx 130-140K and after spending 30-35K on repairs this property will realize its full market value, thereby adding 30-35K in instant equity. You can plan on to live in it or flip for profit [depending upon the renovation loan you choose – discussed later on this page].Apply Now! | Top Of The Page | Back To Index
What Makes Renovation Loans So Popular?
These loans realize the dreams of home buyers. It may be tough to find a turn-key house that matches your dream home. You might want to make some modifications to match your style like, granite counter tops, high-end finishes, raised deck, or a shower that feels like a rain forest. The choice is yours as to how you want your home to look. The possibility of doing this and bundling the rehab cost to the loan amount makes these loans popular.
Well that is not all, you can also consider some structural changes depending on your family requirements like:
- home office
- grand kitchen
- an extra bathroom
- outdoor oasis
- garage bar
- laundry room
Do Your Homework Right
When you are considering a property that needs remodeling before it becomes live-able make sure to keep these two most important things in mind.
- Structurally it should be in solid state or else loan might not be approved in the first place. For example if you have to do roofing, that is so much work and costs a lot of money.
- Architecturally it should be in OK state, for example 4 bedroom and 1 bath is just NOT OK. I hope you get my point.
Having passed those 2 things then comes another checkpoint, Are the doors and windows in good shape? As these can cost 10-12K easily if we have to replace them. Do not stress for painting and flooring and more often than not that will have to be done.
Then comes some DIY stuff, you should be ready to get your hands dirty, it can be paint job or fixing the yard or anything that interests you. With renovation loans there will always be a fixed-limit set aside that you can spend on remodeling part. Here are some tips for remodeling your home on a budget.
- Have your blue print ready : The bigger picture of your remodeled home should be clear in your mind.
- Hire an architect : It is always good to spend some bucks here, architects have a clear vision due to their vast experience. If you are a first timer, you may miss on finer detailing which may cost you more in later stages to fix. Moreover, after going through your requirements an architect can nail-down every bit which will help the contractors when they take over their respective parts.
- Start with big impact changes : This helps in improving the value of your property instantly. We plan for failures – if you hit a bumpy road and you need to sell the house, you should NOT find yourself in a position where you have to bring money to the table to sell the house.
- Creative thinking : Consider those small changes that can make a big difference.
- Borrow or buy second hand tools : You can save some money by borrowing or purchasing second hand tools for the part of the project that you want to handle yourself.
Then comes the bargaining, compare properties that match your budget, do research on history of the property. As to how much has it been sold for in the past, appraisal value and current list price. If you see instant equity realization post upgrades and the math says you can get approved for a renovation loan then go for it… GOOD LUCK!Apply Now! | Top Of The Page | Back To Index
How Long Does It Take For Approval?
Yes, it takes a lot longer for approval’s when compared with regular USDA Loans or FHA Loans. Estimated approval time for a renovation loan can be anywhere from 60 to 90 days and it can be on the longer side if the home requires repairs that involve’s all different kind of contractors, electrical, plumbing, flooring, carpenter etc.
Each contractor that is involved has to be licensed. The contractor gives the quotation for the work that he will be doing on your home and the same has to be approved by the lender. This process of going back-n-forth takes a lot of time. The paper work is also double compared to a regular mortgage.
But the thing is you do not have to run from contractor to contractor to get all quotations, our renovation home loan experts we will help you this.Apply Now! | Top Of The Page | Back To Index
3 Types Of Home Renovation Loans
Here we will discuss the three loan options that help you purchase and remodel your home. In broader perspective these are FHA 203K Home Loan and the other being Fannie Mae HomeStyle Renovation Loan. 203K further has 2 classifications the Standard FHA 203K Loan and Limited FHA 203K Loan (previously know as FHA 203K Streamline). It depends on requirements of the property and your short/long term goals as to which loan might be better for you.
- Limited FHA 203K Home Loan : This is your option if remodeling is less intensive and can be done in less than $30,000/- (There is a buffer amount 4-5K on top of it just in case your costs overrun). Look at this in another way, with this loan you can live in the property during the process of renovation. There is a lower limit set at $5,000/- towards repairs, improvements, and upgrades with streamline loans.
- Standard FHA 203K Home Loan : 203K standard is your option if the cost of repairs are expected to go beyond $30,000/- which is pretty much likely to happen if structural changes have to be done. You have to have an alternate living arrangement during the renovation stage. You will also need a loan consultant who will play the middle man role between contractors and lender as well monitor the progress of work being done on the home.
- Fannie Mae HomeStyle Renovation Loan : HomeStyle can be compared to standard 203K as you can do pretty much anything as long as the improvements are adding value to the property. This option may not suit first time home buyer as it requires higher down payment (5%) as higher credit score (620+) but more to a seasoned investor who would renovate a house and flip for profit once the property is ready.
Comparison FHA 203K Loans vs HomeStyle Loan
Here is a comparison on some key points between FHA 203K and HomeStyle loan.
|Comparison Point||FHA 203K||HomeStyle|
|Renovation Time||6 Months||12 Months|
|DIY Options||No||Upto 10%|
Summarizing what we have covered about renovation loans
Buying a property to live in then FHA is the way to go as it requires lesser down payment and credit score requirements also start @ 580. HomeStyle is the way to go if flipping for profit after renovation or the project is likely to extend 6 months. With 203K upfront MIP of 1.75% is required however if you have 20%+ equity in your home post renovations, mortgage insurance can be waived off in case of HomeStyle. Limited FHA 203K (Streamline) has faster approval process and most lenders prefer this over standard 203K that requires more complex paper work and time to close.
Call our renovation home loan experts, find the best option for your case and get pre-qualified within 24 Hrs
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