Our Program

If you are buying a fixer upper you likely have a list a mile long of projects both big and small that you will need to do to make your new home just right. The problem is how are you going to pay for all of these improvements?

The Answer

There is a solution. It is a loan program for first time home buyers that combines the purchase of the home and the cost of the remodeling all in one loan. This type of loan is commonly called, a renovation loan. The buyers only need to have a down payment of 3% of the total costs (home and renovations). The seller can pay all closing costs and if the buyers do not have the down payment, it can come from a gift from a family member.

A Diamond In The Rough

These loans are great for the buyers that can see the diamond in the rough. They can look past the shag carpet and outdated kitchen. As mentioned above, the loan is based upon the purchase price of the home and the actual costs of the remodeling. So for example, if you are buying a house for $175,000 and you plan to spend an additional $25,000 for a new roof, kitchen and baths, then the lender will base the loan on the future value of $200,000. Keep in mind that the home will still need to appraise for at least $200,000.

Foreclosures, Bank Owned and REOs

It is estimated that by the end of 2008, there will be more than 1 million homes for sale nationally that are owned by a lender or a bank. Many of these homes are in need of repairs that the lender just will not do. The first time home buyer considering a remodeling loan will be able to make a good deal on a home and still have money available to do the necessary fix up. The bank gets rid of a bad asset and the home buyer gets a great bargain.

A House to a Home

If you ask anyone about their first home, most will tell you that they didn’t estimate the amount of time, effort and money it would take to make their first house truly a “home.” Buying your first home with a renovation loan, the buyers are able to quickly get many of the big ticket items (new roof, siding, flooring updating electrical, etc.) completed soon after closing on the home instead of waiting three to five years before it’s done.

Credit Card or Mortgage Debt

Which is cheaper, borrowing using your credit card or your mortgage? Credit card interest is 15-22% and is not deductible. Mortgage rates are in the 5.5-7% range and it 100% deductible. It doesn’t make a lot of sense to use expensive credit card debt to finance your remodeling project when cheaper long-term money is available.

More About Rates

Interest rates for renovation loans are similar to conforming conventional rates. Closing costs are only slightly higher than a typical mortgage loan. The slightly higher costs are related to the additional work the lender must do during the remodeling phase.

Final Note

Doesn’t it make sense to have your new home almost complete soon after you close? Why wait years to have your dream home?

It is always best to gather as much information about the process that you can in advance of making any offers. Get qualified and discuss your ideas with a lender that specializes in renovation loans. Contact toll-free at 1-(866) 898-1465 or by email.