What is a RENOVATION MORTGAGE?
A renovation mortgage or renovation mortgage, home improvement loan, FHA 203k, Home Style Renovation, VA Renovation, remodeling home loan, you can hear many different terns for what you need to make improvements to the house you own or the house you are intending to purchase. My name is Bob Rutledge and I am a Certified Renovation Mortgage Specialist! Give me a little bit of your time and I will do my best to explain all your options as it applies to funding your home improvement. Please feel free to contact me to ask any questions you want or use the form below.
I WANT TO BUY A FIXER UPPER
I Can't Find the Home I Want
There is no Inventory of Homes
This House is Perfect but.....
A renovation mortgage program like the FHA 203k, Fannie Mae Home Style, or VA Renovation can help you!
Consider this very typical home search scenario in today's home buying market; you are tired of renting, or you want a new home, or you are living with the parents and you want to find your next new home. As you begin to explore the neighborhoods you are finding older homes, out dated homes, homes that need 'TLC', foreclosures, houses that just need too much work. Houses you would consider purchasing but.... if it wasn't for all the work and the money you do not have!
If you are only looking for the perfect house you are not seeing all the homes in the inventory! If you are not finding the home you want open up the entire inventory of homes! Ask your real estate agent to show you all the houses on the market that are in the area you are considering, especially the homes that are priced a little below and WELL BELOW your price range.
In our current housing market there always seems to be too few good homes for sale, a trend that is expected to continue for quite some time. Renovation Mortgages can increase the number of homes on the market for you.
Consider that you find a house in the special neighborhood, close to work, in a great school district, etc., and it is priced well below what you were considering as your max home price. The house has a ton of potential and you are sure that with improvements this house would be your home. But, you don't have the money to make the improvements, you don't have the skills, you don't have the time or desire to do the work on week-ends or after work.
A renovation mortgage allows you to buy a house in its current condition and roll in the costs of repairs, renovations, rehabilitation, and home improvements into your mortgage and pay just one monthly payment. Renovation mortgages are a first mortgage similar to any mortgage except they allow you to make any house into your HOME.
With as little as 3% down payment, zero down payment if you are eligible for a VA mortgage
WHAT IF I ALREADY OWN MY HOME
You own you home and you want to make some changes, expand your living area, update your kitchen or bath. Maybe you want a new in-ground pool! New landscaping, with a deck or patio with a firepit! Add a new bedroom or bath or both! Add or expand your garage! Whatever you can think of it can more than likely be done with a renovation mortgage.
What if you have lived in your house long enough and you are considering moving to a new home? But, as you look at your current home you ask yourself would I purchase this house in its current condition? As you look at the houses available in the are you would prefer to live you are finding houses that cost more but are too similar in age and style as your current home. What if you would prefer to live in your current home if it was simply better or different?
If you have the equity in your home consider a home renovation mortgage. Keep in mind that renovation mortgages create equity in most instances. The value of your home is determined by the work you will have done not by the current value. The creation of this equity can make your home worth more!
Appraisals for all renovation mortgages, FHA 203k, Homestyle, VA, and Jumbo, are valued based on the after-completion value of the home. This means the Appraiser will have in hand all the information about what you will be doing to improve the house and will take those improvements into consideration when they appraise your house. Many times this information leads to a greater loan to value creating additional equity after all the work is completed. BONUS: the FHA 203k will allow up to a 110% loan amount of the after completion valuation.
HOME IMPROVEMENT LOAN OPTIONS:
There can be many options available to you if you are considering financing your rehab, remodeling, repairs, or improvements to your homes. Some will only work for you if you already own your home. I will provide a brief explanations of the mortgage programs I can help with, a more in-depth explanations of mortgage programs are available within this website. I will also provide other options to finance the work you want to be done to your home or soon to be new home.
Home Equity: there are a few types of home equity loans, the one that most will know is the Home Equity Line of Credit. Home equity loans utilizes the current equity in your home, it is a second lien against your property and the funds can be provided to you either as a line of credit or a lump sum distribution. Another, is a cash out refinance.
Back before the housing market fell when a house needed remodeling the homeowner would simply use a home equity line of credit or loan. The housing crash has changed that, though we are starting to see homes re-establish themselves and many homes have equity in them.
All equity loans rely on the current value of your home and will not take into consideration the future value of your home once the remodeling, rehabbing, or improvement are completed. But, they are home loan options that need to be considered. The biggest problem for most home owners is that you must retain anywhere from 10% to 20% equity in your home with these programs. Not all home owners will have that much equity in their home once the new lien is combined with the new equity loan.
FHA 203k Renovation Mortgage: is the grand-daddy of all the renovation mortgage programs, created by the Federal Housing Administration, FHA, which is a part of Department of Housing and Urban Development or HUD. The section of FHA guidelines refers to borrowing additional funds to make repairs and improvements to your home. You can use the funds for simple upgrades, like a kitchen or bath improvements or updates or for rebuilding a house that is unlivable. You can even use a 203k rehabilitation loan to tear down an existing structure and build a new one using some portion of the existing foundation!
There are two FHA 203k options, the Standard 203k and the Limited FHA 203k, at one time the Limited 203k was referred to as the Streamline FHA 203k.
Limited FHA 203k: when you need limited repairs and/or the total renovation costs are less than $35,000 the Limited FHA 203k may be what you need. Replacing carpet, repainting, or replacement or purchase of appliances, but anything structural in nature and you will need to utilize the Standard FHA 203k.
Standard FHA 203k: covers repair costs in access of $35,000 and could include structural work and/or landscaping. There is a minimum of at least $5,000 in repair costs necessary. A feature of the Standard FHA 203k is that you can roll into the mortgage up to 6 months of monthly payments! A HUD approved 203k Consultant is required of this program.
To learn more about the FHA 203k visit my in-depth page ALL ABOUT THE FHA 203k.
Fannie Mae Homestyle Renovation Mortgage: according to Fannie Mae the HomeStyle Renovation Mortgage enables a borrower to obtain a purchase transaction mortgage or a limited cash-out refinance mortgage and receive the funds to cover the costs of repairs, remodeling, renovations or energy efficient improvements to the property.
The Homestyle Renovation Mortgage requires a minimum 95% loan to value, meaning at least a 5% down payment for a purchase and a 5% equity stake left in the home if a refinance. Value is determined by an appraisal that takes into account the work that will be performed on the property, value is determined by an After Completion valuation by the Appraiser. There are guidelines within the program that allows under very limited and specific rules for a 3% down payment and/or 97% loan to value.
Essentially, the Fannie Mae Homestyle is very similar to the FHA 203k Renovation Mortgage, but will allow for a few different types of work to the home. For example, a Homestyle Renovation Mortgage will allow a home buyer or home owner to install an inground swimming pool where the FHA 203k will not. The Homestyle has a higher loan limit than the FHA 203k and one of the main reasons for the decision to utilize this renovation mortgage.
If you would like to learn more about the Fannie Mae Homestyle Renovation mortgage follow this link to my in-depth webpage To Learn More About the Fannie Mae HomeStyle Renovation Mortgage.
VA Renovation Mortgage Program: the newest mortgage program to have it's own renovation mortgage program! As of 2018 there is now a VA mortgage program that allows qualifying Veterans, service member, or qualified surviving spouse to finance home improvements.
100% financing, either purchase or refinance, yes that means no down payment for a renovation mortgage! Contrary to what is being told to many VA borrowers there is no maximum renovation costs associated with the VA Renovation Mortgage, if your VA benefit allows for it you can borrower up to your maximum VA benefit.
JUMBO Renovation Home Loans: as the name implies, a Jumbo Renovation Mortgage can be used to pay for and renovate homes of great value. Because jumbo home loans are not overseen by Fannie Mae or Freddie Mac they are considered portfolio or non-QM mortgages, the maximum or cap on conforming home loans is generally around $453,100 but changes from time to time. Anything over the conventional loan limit is considered a Jumbo Mortgage.
The Jumbo Renovation Home Loan works similar to a Conventional Renovation Program - in that the lender takes the costs of purchasing your new home or paying off your current mortgage in the case of a refinance, combine the renovation costs, and roll it all into a single home loan.
Jumbo Renovation Mortgages are a very rare program, not all mortgage lenders who provide renovation mortgages also provide a renovation mortgage for Jumbo buyers. If I cannot do the Jumbo Renovation Mortgage for you I will be able to refer you to another lender.....there isn't but a few that do these mortgages.
WANT TO KNOW MORE?
DO YOU HAVE QUESTIONS?
Visit my Reno FAQ page or use the form below
My name is Bob Rutledge and I specialize in renovation mortgages, I am a Certified Renovation Mortgage Specialist, and I close renovation mortgages every month. Most mortgage lenders cannot say that.
I have the ability to close FHA 203k and HomeStyle Renovation loans all over the State of Missouri, quickly, easily and with far less stress. I have worked with home buyers and owners not only in St. Louis and the surrounding area, but in Kansas City, Springfield, Cape Girardeau, Columbia, Sikeston and other towns in Missouri.
I am also licensed to close renovation mortgages in Texas, Ohio, Florida, and Illinois.
We are licensed in 48 states and many of the United States territories. If I cannot help you with your renovation mortgage needs I can refer you to someone that I trust.
If you need help with a renovation mortgage, have questions or would like to apply for a renovation mortgage please free to contact me. Email me at FHA203kbob@gmail.com or call me directly or use the form below.