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Renovation Loan – simplifying the process

How are fees different on Renovation Loans? FHA 203k, Homestyle and VA renovation loans discussed John Adams imortrgage

How are the fees different on renovation loans compared to regular loans? We want to tell you about the different fees associated with renovation loans. Most people’s first concern is usually with rate more than how fees are different than a regular loan. Use a step-by-step approach try to find out which loan program is most beneficial as it may vary from customer to customer and there are more solutions now than there have ever been.

FHA 203(k) is the popular buzz word in renovation but now there are a few renovation loan types you should know about. You’ll want to get a copy of the Maximum Minimum worksheet on any renovation loan to understand the administrative or supplemental origination fees as well as any consultant based cost that may not be disclosed on the initial or even the good faith estimate.

The biggest buzz in renovation lending right now is VA Renovation. VA Renovation lending is a very popular topic right now for veterans looking to buy and renovate a home inside of their VA purchase benefit and mortgage. There are no similar costs for supplemental and admin costs like other renovation loans, but if you do have some costs for permitting in the renovation process it must be disclosed in obtaining the loan not just lumped into the renovation amount like the other renovation products.

The Fannie Mae Conventional Homestyle loan is probably the most comprehensive renovation loan because you can help customers purchase or refinance and renovation primary, second home or investor occupancy property. You can also do must repairs that include luxury items different that the government based renovation solutions. Traditionally, most every lender charges supplemental or administrative fees on this loan product. Currently imortgage does not have these fees associated with Homestyle. This is an opportunity to shop around as some companies also have different requirements on this product for a third-party consultant to review the scope of work. This is a similar consultant used on an FHA 203 K as a consultant. imortgage requires a consultant only when projects exceed 50,000 or if the project has any structural work associated with the repairs. Most competitors have a policy to get a consultant if the project is over 15,000 . This can add another 400-600 dollars in additional expense with a competitor before you even discuss the rate and terms.

FHA 203 K probably the most well-known renovation loan by consumers and Realtors. FHA 203 K will be a one size fits all approach to primary resident purchase to include repairs. If you’re looking to renovate and you don’t have the best credit it may be a great option for you especially is you are geared for a low down payment solution. FHA 203k does have and supplemental origination fee calculated based on the amount of renovation you have. Based on your projects size and scope of work you may also have to high a HUD consultant. You will need a HUD consultant if your project amount is over thirty five thousand dollars, adding some square footage or structural repairs. You need to know the hud site for searching for a consultant ( Find a HUD Consultant ) as well as the Hud Consultant fee schedule:

The base fee is $400 for the repairs that range between $5,000 to $7,500. For amounts ranging between $7,501 to $15,000 the HUD 203k consultant fee is $500. For renovation work amount between $15,001 to $30,000, it’s $600. For the cost of rehab work that falls in the range of $30,001 to $50,000, the 203k consultant fee is $700. The fee will be $800 for fix-up work that falls between $50,001 to $75,000. If the proposed repair work costs between $75,001 to $100K, the fee would be $900. In those rare cases where the renovation work to be undertaken exceeds $100,000, the fee shall be $1,000. The above mentioned FHA 203k consultant fee amounts are meant for single family residential homes. For multi-family homes, the fee charged may be higher. Typically, it would be an additional $25 for each unit beyond the 1st one.

If you need help on making all these decisions as always the best thing to do is always pick up the phone and reach out to us. We have got all this information down very well. The biggest part of what we do is helping customers understand their options and making sure they have all the resources to make the best decisions.

Renovation Loans Let You Get All Your Projects Done Upfront

Renovation loans are a hot topic! Most borrowers try to figure out how to do as little renovation work in the loan as possible to meet minimal appraisal standards and keep the loan amount down. Some want to save some work for after closing for themselves to do but several renovation loan customers have buyers remorse in that they wish they would have done all of the projects they were thinking about up front so they could have started enjoying them right away or otherwise found later didn’t have the extra cash to do themselves. Use Homestyle, 203k or Va Renovation to build your dream home and to make that dream instantly a reality!

In the new renovation era, most customers are doing more and more preferential work than required repairs. Our advice is to try to get all of the work you are thinking about done up front in one simple transaction. In your bid process, write down all of your “wants” so you can comparison shop an apples-to-apples quote with your contractors.

On average, the consumer will spend between $5,000 and $8,000 in improvements and appliances within the first year of ownership, regardless of loan type. Why take more money out of pocket when you could use this in the entire project and keep more cash on hand and get a tax deduction from your mortgage?

Why buyers want a renovation loan

John and Tu are in North Shore in Jacksonville Florida this week for the renovation minute. They are talking about opportunity for people to be able to find homes with some scratch and dent quality that allows you to win on equity and customization. Most ready to move in homes right now are going quick on the market or highest and best the same week its listed. A renovation property allows you to compete with lower cash offers from investors and has a smaller buyer pool for primary occupants. Besides getting a lower price and perhaps some built in equity on the home the other major benefit to customers is also in making it exactly how they envision it. Call the renovation lending experts to find out how you can transform your ideas into your next home purchase. Buy distressed and save – win on equity and customization.

See Renovation loan product options 

Renovation loan tips for FHA 203k, Homestyle, VA Renovation

On this renovation minute we have three tips this week on how to make your renovation loan a success.
1. Get up close and personal with your contractor. Collect all documents as well as the bid and make sure they have the administrative competency to get you the documents the process demands quickly.
2. Consult your renovation specific loan officer prior to making an offer on any home to make sure that the project and cash to close have been reanalyzed to make sure your offer is what you think it is. There are different closing costs the buyer is responsible for depending on who the seller is i.e. Short Sale, Bank Foreclosure, natural seller …
3. Get a Maximum Mortgage worksheet upfront ( MMW ) these forms spell out all of the costs of a renovation loan that are associated with the renovation escrow account and show all of the true anticipated fees with a Homestyle, FHA 203k or even a VA renovation loan so you know exactly how the process works.

FHA MIP Decreases! Great news for 203k renovation loans

By Presidential order the monthly premiums on FHA loans were reduced for case number after January 26th, 2015. This is great news as it lowers payments and can qualify more borrowers for home. For Renovation loans, especially 203k loans this means you can qualify for more repairs or pocket the savings. Please read the FHA mortgagee notice on the link here and the great news about lower mortgage insurance factors. This is one small step in the right direction and certainly a win for anyone wanted to get a 203k renovation loan or regular 203b loan financing.

http://portal.hud.gov/hudportal/documents/huddoc?id=15-01ml.pdf

 

Three ways Freddie Mac can save a loan

 Thanks for joining us on the renovation minute. We are bringing you three ways to help keep transactions together with Freddie Mac.
1. For self employed borrowers on Freddie they now only require one year of tax returns to income qualify instead of having to average two full years
2. The schedule most folks use for itemized deduction on their tax forms ( 2106 ) can sometimes be added back to income whereas previously these deductions were deducted from usable income on a transaction.
3. In special circumstance we can use a non-occupant co-borrower with an occupant co-borrower to qualify a loan applicant up to a 75% loan to value.

What is a Renovation loan? FHA 203k, Homestyle, and VA Renovation

On this renovation minute we discuss what renovation lending does and what a renovation specialist is and why you would want a specialist to do this loan rather than a general mortgage practitioner. As a renovation specialist team, we have conducted hundreds of closings each year in renovation as well as teach a certified 3 hour continuing education credit class to Realtor across the state. We have the time talent and resources to get customers through the process of buying a home and experience you need for someone looking for a mortgage with the specialty of the nuances of renovation lending. It doesn’t matter if your client is adding the repairs required for minimal requirements or just for preference work like adding a pool or remodeling a kitchen. We can help them navigate the process easily the first time but frequently get involved once customer have gotten frustrated elsewhere and decided to call in a specialist. Please see our customer testimonials for more information on this.
Finance any home in nearly any condition with FHA, conventional and now even VA renovation programs! Close now and renovate later. Get financing with all the fixings. Call the experts to help your clients create their dream home today!

VA, FHA and Conventional changes for 2015

VA, FHA and Conventional changes in 2015

Thanks for joining us again and providing valuable feedback!
Conventional lending available to first time home buyers with only as little as
3% down. FNMA has reduced the minimal amount for first time home buyers to acquire
a home with conventional financing. We recapped some of the question we received
back from views last week on this. This allows first time home buyers to reach
higher loan limits with less expensive mortgage insurance options.Read more directly
from Fannie Mae:

https://www.fanniemae.com/content/announcement/sel1415.pdf

FHA has repealed its 90 day flip policy. Since 2010 HUD has eased restrictions on
these sales to help boost sales and rehabs in undeserved markets and markets with
predominance of foreclosures. This policy does not impact sales directly from banks,
or other federally exempt agencies.
http://www.floridarealtors.org/NewsAndEvents/article.cfm?id=314957

Va is following suit with FHA and will also be changing the loan limits. Please
look up your county to see the new changes or call us to get specifics on your counties
new loan limit. There is still ability to insure higher loans than 417k with additional
down payment please call for questions on this.

https://entp.hud.gov/idapp/html/hicostlook.cfm

Self-employed mortgage? You need to know this …

1.
Conventional lending available to first time home buyers with only as little as 3% down. FNMA has reduced the minimal amount for first time home buyers to acquire a home with conventional financing. This allows first time homebuyers to reach higher loan limits with less expensive mortgage insurance options.Read more directly from Fannie Mae:
https://www.fanniemae.com/content/announcement/sel1415.pdf

2.
FHA has repealed its 90 day flip policy. Since 2010 HUD has eased restritions on these sales to help boost sales and rehabs in underserved markets and markets with predominace of foreclosures. FHA has said now that they have helped boost this sector they are goign back to guarding its clients from sales there the home must be seasoned for at least 90days. Read on here: 3. FHA / HUD has changed county loan limits
http://www.floridarealtors.org/NewsAndEvents/article.cfm?id=314957

3.
FHA/HUD will be changing the loan limits. Please look up your county to see the new changes or call us to get specifics on your counties new loan limit.
https://entp.hud.gov/idapp/html/hicostlook.cfm