Are you thinking of renovating a home but need assistance in terms of financing?
You might want to check on a type of loan called Home-style Renovation.
The Home-style Renovation Loan is a mortgage loan that helps with the purchase of a new home needing repairs or refinancing the original mortgage with the cost needed for repairs. The base of the loan is the improved value, as all improvements are completed, rather than the original purchase price of the home. This will also be the basis of the mortgage insurance later on.
A definite advantage of a home-style program is that it allows second mortgages, unlike in a traditional FHA 203k Loan. Moreover, there are a few exclusions in the covered improvements. The only requirement seems to be that the improvements be permanent fixtures in the home. For as long as it ups the value of the property, the improvement is allowed.
There is also wider elbow room for borrowers under this option. They may opt for a DIY or a licensed contractor. The requirements differ for the two so make sure you speak with your mortgage officer or specialist which home-style type is better for your loan scenario.
Under the Home-style Renovation program, the coverage may be up to 50% of the improved value or $150,000 in cosmetic or structural repairs. This amount may already include the 10% contingency reserve and all other fees. No exceptions can be given beyond the 50% improved value limit as this is a Fannie Mae limit. Further, the borrower may not fund the overage in excess of the repair amount limit.
This type of loan is best for investors/buyers who would want to use minimal capital in a single property in order to invest them in more properties. If you are a first time home buyer or investor, it is most crucial to engage the services of experts in the field to get you started.
PrimeLending offers Rehab Loans to help homebuyers whose dream home many not be in its best condition. Contact one of our mortgage bankers today and find out how PrimeLending can help you buy the home of your dreams!