Work With A Renovation Loan Professional

Yes. There are renovation loans for single family and two to four unit residential buildings that allow renovation funds too be added to the same mortgage. Also, any owner occupied one to four unit property can be the subject of a renovation loan.

Yes. The Appraiser will determine the ARV of After Renovated Value based on a written contractor budget detailing the updates and repairs to be done during the renovation. The mortgage will then be underwritten with the ARV instead of current value or sale price. In this way a renovation can work to provide funds to restore most any property, no matter the condition, using its future, as finished value.

For those who will be owner occupiers, up to 6 months of full mortgage payment can be financed into the renovation loan. That includes principal and interest; property tax escrow; home insurance escrow and any required monthly mortgage insurance.

Available renovation loan types include FHA 203k; Fannie Mae HomeStyle; Freddie Mac Choice Renovation and a VA Renovation loan for eligible Veterans and Active Duty military.

Yes. Each renovation loan type requires at least a 10% Contingency Reserve based on the total renovation budget. In cases where properties do not have all utilities working, the Contingency Reserve automatically increases to 15%. In some cases, a Contingency Reserve can be 20% of the base renovation budget. If never fully used, the amount remaining is subtracted from the loan principal upon completion, reduces the total mortgage size accordingly.

Each renovation loan type has specific regulations regarding how renovation funds are accessed by a contractor. FHA 203k allows no withdrawal of funds at closing. Instead, funds are sent to the contractor in arrears to pay for completed work in phases, typically no more than five. With HomeStyle or Choice Renovation, a contractor can be given up to 30% of the renovation funds at loan closing with First Community Mortgage. The VA Renovation loan allows up to 30% of funds to be given at closing.

No. All the renovation loan types are one single loan with renovation funds added into the single loan. Terms can be for 30 years, with a fixed interest and amortizing payments.

A borrower may select any licensed contractor, but each contractor must be validated to be sure a license is current, insurance coverage is current and any required Workmen’s Comp policy is in place. Additionally, a background check is done to learn of any client complaints, litigation, etc.

Yes. Adding to the house either out or up is frequently done within whatever the local building department will issue building Permits to do. Clients have added second floors to ranches and bungalows for example. Other clients have salvaged only a foundation and part of the support walls to construct a brand new home within the shell of an old one. Other clients have gut rehabbed two to four unit’s apartment buildings including adding basement square footage to an apartment above, etc.

Yes. The renovation loan types will allow most of these items to be included. The exception is FHA 203k does not allow luxury items defined as outdoor kitchens jetted bathtubs, steam showers, saunas, basketball courts, tennis courts, new swimming pools or other similar luxury items.