Renovation Financing - a key to saving purchases in tight markets?

By
Services for Real Estate Pros with CMIT Solutions

With many areas in the Houston(TX) area at LESS than 2 months' inventory - there is a little known  secrect for keeping the Buyer interested: suggest that they consider a Renovation 1st purchase mortgage.

Why?

For example: Buyer LOVES the home - Except: wife says the Kitchen is outdated, or husband wishes it had a swimming pool (do you really want to tell them to do 2nd mortgage later?).

Option: do a 1st mortgage that INCLUDES the renovation cost. Up to 95% LTV.

Example:

LTV: 95%

PURCHASE/RENOVATIONS Costs:
Sales Price:                                 $ 190,000
Labor/Material:                            $   39,500
Soft Costs:                                   $    2,200
Contingency:                                $    4,170
Monthly PITI:                                        0
TOTAL:                                                        $ 235,870

"As Completed" Value:                                   $ 250,000

Maximum Loan Amount:  (95% x lower of Cost/Value):  $ 224,076

As you can see, there can be a wonderful added benefit (increased value).

***IF the Borrower has to move out of the residence during renovation, we can include up to 6 months' PITI to cover living expenses.

Hope this helps you look at things from a different perspective; AND hope you can save a few deals - to increase your Income.

For More Information on this program - please contact Al Rodenburg - Sr. Mortgage Loan Officer, NMLS # 272775; CMPS Certified, at:

Call: 281-402-3650

email: alrodenburg@gmail.com

Posted by

Al Rodenburg - NMLS# 272775
Sr. Mortgage Banker

Comments (1)

Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

I've done a few FHA 203(k) renovation loans, but they wouldn't have permitted adding a swimming pool.  Perhaps in areas where most homes have a pool, but not in this area.

 

Apr 15, 2014 05:47 AM