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.