Renovation Loans - which one is right for you?

If you have been shopping for a home recently, you have probably been in a few that could benefit from some TLC.  A renovation loan may be just the thing to turn those homes that have been neglected into the home you've always wanted.  Many homes on the market are in some state of disrepair since the owners who have either had to resort to a short sale or a foreclosure haven't had the money or incentive to maintain them.  Even homes that are sold as an equity sale may have design choices that aren't in alignment with your tastes.  So what do you do when you find the perfect home in terms of location, size and floor plan but it is in need of a serious makeover?  You make it into the home of your dreams with the right renovation loan.

There are a few renovation loans to choose from.  FHA has the 203(k) Full and Streamline.  FNMA has the HomeStyle Renovation loan and the HomePath Renovation loan.  The FHA loans are great because the same guidelines apply to these loans as they do to regular FHA loans which means your credit doesn't need to be quite as good as it would for a conventional loan and your job history doesn't need to be as established either.  The streamline version of the 203(k) allows for up to $35,000 in repairs which can include financing the purchase of new appliances (fridges, AC units, water heaters, etc.) along with other energy efficient items.  Borrowers who choose this option usually replace the flooring and countertops, refinish the cabinets, repaint the inside walls and purchase some appliances.  The Full version of the 203(k) allows for more extensive renovation including adding on to the house or reworking the existing layout.  Both types allow for roof, plumbing and electrical repair.  This video will go over the details of the FHA 203(k) Streamline loan and here is one great example of a home makeover that was financed by the FHA 203(k) Streamline loan.

The FNMA HomeStyle Renovation loan is a great loan for borrowers who can qualify for conventional loans and want a loan that will allow them to improve the outside of the home in case you want to add a pool or a patio (very few lenders have access to this loan - we do).   The HomePath renovation loan is limited to homepath loans only so I want go into any detail about them here.  When deciding on what home to buy, your choices come down to whether you are happy with it as it is or whether you would like to make it just the way you want it by using a renovation loan.  Which loan you choose to finance the renovation will depend on several factors that need to be discussed with the loan consultant.  If you are considering a home that you plan to make some improvements to, I would highly recommend using a renovation loan as compared with trying to finance the repairs with a credit card.  Some advantages of a renovation loan include:

1. No appraisal contingencies for deferred maintenance - sellers love this,
2. less competition because many buyers won't consider homes that need much work,
3. lower initial sales price and more possibility for price negotiation,
4. renovation can occur before you move in by a licensed contractor,
5. interest you pay on a mortgage may be tax-deductible as opposed to the interest paid on a credit card which isn't.

One final consideration when choosing a renovation loan as compared to a regular mortgage is who's going to do the repairs.  The videos above go into more detail about this but if your loan consultant has a good relationship with a reputable contractor, that would e the preferable route since that contractor probably knows the timeframes of the loan and what is required so that the loan can be closed in a timely manner.  Check out the videos and see if a renovation loan is right for you.  If it is and you live in Nevada or California, I would love to help you with the financing.  Feel free to comment and share with your friends or clients.

The Wunderli Team Introduction

I am beginning my new blog under The Wunderli Team and want to start of by introducing myself.  I have lived in Henderson, NV since 1997.  I moved here from Salt Lake City with a wholesale mortgage company and soon became a retail loan officer for a broker.

As a loan officer, I have helped many clients finance their homes with FHA, VA, conventional and Jumbo loans.  I have helped several clients with the FHA 203(k) loan so that they could finance remodeling work.  As a Certified Mortgage Planner, I extend my responsibilities as a loan officer by helping the client choose the best financing for them and their financial goals.  My understanding of the mortgage bond market is due in large part to the training that I had when I worked for Fidelity Investments as a Series 7 licensed representative trading stocks, bonds, mutual funds and options for people on their accounts.  

My goal is to educate clients and referral partners as to loan programs and the current state of the mortgage bond market so that thy can understand their choices and get a feel of when to lock their loan.  Check out The Wunderli Team facebook page for almost daily information regarding the mortgage bond market and what interest rates are doing.  Please like the page so that you don't miss any of the updates and feel free to comment on it and share it with your friends so that they can benefit from this valuable information.

If you would like to know more about renovation loans and how you can finance repairs and improvements in your mortgage, check out The Wunderli Team YouTube channel.  You will find videos that help you understand exactly how the FHA 203(k) works along with videos that share some of the home renovations that have been completed with this great loan.  Additionally, you will find videos of me discussing the mortgage bond market along with my lock / float recommendations.  

For potential clients who are reading this, I want to help you get the right loan with the best terms.  If you have any questions or would like me to provide you with a recommendation for your specific situation, please feel free to call me at 702-812-1214.  

For potential Realtor partners, I want to help you have smooth closings by providing good (honest and timely) communication throughout the process.  I also want to help you grow your business by sharing and implementing some strategies that will help generate new business.