Welcome to the renovation minute from the John Adams Team. Happy Thanksgiving! Most people still don’t realize you can buy just about any home regardless of condition and fix all repairs after closing. You can do this with a purchase or refinance and renovation loan. These loan programs require as little as 5% to 100 dollars down for primary Residence, as little as 10% for second home and as little as 15% down for investors.
Let’s say you find you perfect “fixer” and it need 40k of renovation work either just in preference work customized to fit your needs or required repairs to meet minimum standards ….We negotiate a home price to 160k. In this instance the total acquisition costs of the home would be 200k before closing costs and pre-paid expenses. Your down payment will be calculated based on the total acquisition costs of the purchase plus renovations. You get to choose your contractor for repairs and your final bid…. An appraisal ascertains the forward value of the home based on these repairs. The loan closes and after closing work is completed.
There are many advantages of this product for people with plenty of funds for down payment as well as folks they may not have a huge down payment. Some people buy a brand new home with this product and include a pool in their financing or other custom feature their builder may not want to invest in. Some people feel they don’t want to finance repairs because they can pay cash for them. This could be true if the home is in financeable condition “as is”. But many people don’t understand or discount the idea of those cash deposits counting toward your down payment in these scenarios. Sometimes those cash deposits or improvements paid in cash could have alleviated the need for mortgage insurance, higher insurance costs and energy savings. With renovation lending we will know in advance that the work we are doing is not an over improvement by a getting value prior to the work being completed. Some homeowners have come back to revisit the renovation loan after their regular loan closing because they have not been able to get second secondary financing like equity lines. Having all of your financing done at once can afford you peace of mind about the changes you are making and gives you instant improvement to your quality of life.
This season don’t get Trytophan(ed) up by a lender that doesn’t have the experience to navigate you through your renovation project. Gobble up savings on distressed real estate and stuff your home with equity like a Thanksgiving Turkey. Whatever you are tailoring your home to meet your lifestyle or just putting on a new roof you can trust the experience of the John Adams Team to help you on your next renovation loan.