12 — Say you saw it in The Real Estate Browser of Lynchburg — Volume 8 Number 10 www . LynchburgRealEstateBrowser . com
Renovate and Make It Your Own
By Sherry Brady , NMLS 217258 , Branch Manager , Summit Mortgage Corporation
If you ’ ve been looking for you next home , and found yourself thinking “ This home would be just perfect for us …. if only it didn ’ t need so many updates ”, then I have a solution for you . Two solutions , in fact : Fannie Mae ’ s HomeStyle Renovation loan , or FHA ’ s 203K Renovation Loan .
I know so many people ( yours truly included !) who have bought a home with the intention of finishing off the basement , or remodeling the kitchen or bathrooms soon after purchase , but then years go by and it ’ s still not done . Why ? Several reasons probably , but the biggest of them is money . Not many people are able to buy a home , and then very shortly after , put their hands on the cash needed to do an extensive renovation . Many people buying a home today – especially first-time homebuyers – put less than 5 % down , and have very little savings in reserve after the purchase . So , if you are looking at a home that you know has things you want to “ fix up ” after you buy - where will the money for that $ 25,000 kitchen and bath remodel come from ? It would probably take years to save that up , or it will most likely be many years before you will accrue enough equity in your home that you can get a home equity loan to accomplish it . Some home improvement companies offer “ remodeling loans ”, but those loans tend to have higher interest rates and shorter terms , so the payments are unaffordable . So , what ’ s the answer ? One possible answer is to arrange for your renovations ,
up-front , at the time you buy the home ! Both Fannie Mae and FHA offer loans to do just that .
The HomeStyle loan requires just 5 % down . Your renovations can total approximately 50 % of the projected after-improved value of the home , and most any type of improvement is allowed , so long as it ’ s permanently affixed to the property . All work must be done by a licensed contractor .
The 203K loan requires just 3.5 % down , and like the HomeStyle it can be used for renovations ranging from minor to virtually rebuilding the home . With the 203K though , major renovations will require the use of a HUD Consultant who will serve as a liaison between you , the lender , and the contractor to help make the process easier .
For either loan , all work must be performed by a licensed contractor . Your renovation might include things such as refinishing / replacing flooring ; new appliances , and kitchen or bath remodels ; new windows , doors , siding or roof ; upgrading electrical wiring or plumbing , or installing a new well or septic system ; making the home handicap accessible ; and the list just goes on and on .
If you ’ re looking at ( or already own ) a home that needs some repairs or modernization , call us today ! The FHA 203K loan or Fannie Mae HomeStyle loan could be the perfect solution to help you create your perfect home !