Does your residential investment property or second home need some TLC or updating? Or are you in the market place to purchase one that needs renovation cost (no structural, landscaping, or site amenities) less than 35k? If so, you can apply for those improvements in one loan with Fannie Mae HomeStyle renovation loan! Similar to the FHA 203k loan, but without PMI and UFMIP charges (1.75%). Loan to Value will influence final interest rate pricing and is determined differently for purchase and refinance applications. For a purchase the lesser of the hard costs plus purchase price or after improvement appraisal value will determine the LTV (loan to value). For a refinance, the loan payoff balance plus renovation/closing costs are divided by the future subject to completed appraised value. See examples below:
Investment property Purchase: Single Family home, 25% down payment required purchase price 115k, renovation costs 35k, and subject to completed appraised value 200k. 25% down payment will be based on 150k or $37,500. If total after completed value was 140k the 25% down payment would be 35k and the remaining renovation costs would have to be paid out of pocket.
Second Home Refinance: Single Family home, mortgage payoff balance 150k, renovation costs 35k, and subject to completed appraised value 225k. Take 185k and divide by 225k and the LTV is 82%.
Asset reserves of the total housing payment for the subject property and any others owned is required. Also, note that the renovation money financed does not get disbursed at settlement or loan funding! Draws (maximum of 5 given) are requested by the borrower(s), and the dollar amount is determined by an appraiser's inspection and interpretation of the percentage of work completed. All applicants must be prepared to cover the cost of material or deposit requested from the licensed contractor to start the work proposed. All work must be performed by a licensed contractor, and plans/specs to be prepared by HUD consultant (most recommended) or Architect.
I personally prepare these applications, and all underwriting is completed in-house as my company is a Lender! Expect closing on this loan in less than 45 days and for your home renovation to be completed within 90 days after closing/funding max. The scope of work and the availability of material will determine the actual time. Until then, lock in your licensed contractor for best prices and anticipated completion dates. Use a Realtor or my resources to help determine the anticipated appraised value. Always consider me first for payment/closing cost scenarios for any residential or commercial home loan scenario.
Web Site: edubinsky.ahmcloans.com
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