The Home Style Renovation Mortgage: How to Use it to Fund Fixer-Upper Houses
Home Style Renovation Mortgage: What is it?
The Home Style Renovation mortgage is a single-close loan that lets you buy the home that may be in need of repairs. It is also possible to refinance the mortgage on an existing home and include the funds needed for repairs into the new mortgage. The loan amount for the Home Style Renovation mortgage is based on the “as-completed” value of the home rather than what the home is currently worth. A perk for this type of loan is that you do not have to occupy the property in order to qualify for this financing. In other words, you may use it for vacation of investment properties.
Home Style Renovation Loan Programs
When getting a Home Style Renovation mortgage, it is possible to get a 15 or 30-year fixed rate, as well as certain adjustable rates. Standard mortgage insurance pricing applies to all Home Style Renovation loans — but the MI will be required to cover the as-completed value, not the as-is value of the property.
Second Mortgages Allowed
With the Home Style Renovation loan program, it is possible to get a second mortgage, such as a Community Secondsloan, that goes up to 105% of the value of the property. It is also possible to get a non-Community Seconds type of second mortgage, although there will be an increased fee when done.
What Improvements Are Allowed?
There are very few limits on the type of improvements that can be made with the Home Style Renovation loan. The only requirements are that the improvements must permanently be attached to the property and the improvements must add value to the property. Some simple examples of improvements that qualify include in-ground pools, decks, landscaping, and fences.
Home Style Renovation Contractor Requirements
The Home Style Renovation loan program allows for both a DIY option and the option tohire a contractor to perform the work. If you hire a contractor to perform the work, they must be licensed and registered. The contractor will submit all plans and specs to you and the lender for approval, as well as to the appraiser, who can then help determine the as-completed value of the home. There are special rules for DIY financing — so if you are interested in doing the work yourself, be sure to speak with your loan officer about the rules.
Always ahead of the highly competitive RGV real estate market, Marilyn Cortez is a Spanish speaking native of the Rio Grande Valley. Born and raised in Mission, Marilyn is committed to her clients, and is recognized as a Top Agent in the Greater McAllen Real Estate area, and within Keller Williams Realty. Since the start of her Real Estate career in 2007, she has sold over 40 million dollars of real estate. Known by her fellow real estate agents to be hardworking, honest, dedicated and motivated, Marilyn is knowledgeable in all areas of Real Estate and has built her business on results, with more than 70% of her clients being repeat clients.