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  • Renovation

    • With the advent of HGTV channels and many shows specifically geared towards flipping houses and renovating them; the renovation loan has become a popular refinance option lately.

      The standard types of renovation loans are Fannie Mae Home Style and FHA 203k; both of which require the borrower to occupy the property.

      These are not designed for investor to fix and flip, but, for people to move into the property, renovate it and continue living there.

      This will boost property values and improve the overall health of neighborhoods previously hit hard by the 2008 market crash.

    • Benefits

      One of the great benefits of these two renovation programs is the fact that you as a borrower do not need to have experience with repairs and renovations; they are pretty turnkey.

      FHA for example will hire what is known as a HUD Consultant that will liaise between you, the lender, the contractors and the appraiser to make sure the project is within the budgetary framework and moving along toward the borrowers end goals/vision.

      These programs will lend funds based on the future appraised value of the property which enables the borrower to obtain the maximum amount of financing, almost 100% loan to present value.

      This coupled with the fact that FHA allows credit scores down to 580; and this renovation loan is available to many many borrowers.

      These programs are also not only available to those that currently own the property, they are available to those that wish to purchase property and improve upon it.

      So, the down payment may be non-existent as the program is designed to lend based on the future value after all renovations have been complete.

      Remember, the renovation is monitored by and administered through with a HUD consultant with a budget in mind.

      There are also tax benefits involved when discussing spending money on repairs of a property (one should consult their CPA and tax attorney directly).

    • Conclusion

      With interest rates at historic lows, property values rising, and very generous underwriting standards; it is a great time to take advantage of some of these renovation refinance programs to greatly increase the value of your property or purchase a property to renovate and add value.