The rise in popularity of home renovation loans is two fold in Metro areas across the country.
- First, you can often grab a fixer under market value if you are willing to have a vision of what can be.
- Second, finding affordable close-in properties can seem next to impossible with the hike in home prices since early 2020.
Rapidly becoming the loan of first resort for everyone from first-time home buyers to growing families, renovation loans fill a much needed financing niche allowing homes that would have been cash only purchases-they would not pass a home inspection-to be financed with as little as 5% down.
New Math
These hidden gems are often overlooked by would be buyers as I discovered after joining my realtor partner in the house picture above for only a few hours one Sunday afternoon. I created numerous excited prospects with the visual below highlighting the cost efficiency of renovation loans and hopefully increased the pool of buyers now out there shopping for a fixer.
The Benefits
- Allows buyers access to properties under market value that just need some love
- Can be combined with a bridge loan, offering move-in flexibility to complete major repairs prior to occupying the property without leaving an existing home
- No additional cash out of pocket to fund improvements preserving cash reserves for qualifying and payments
The Highlights
- Finance the cost of the improvements AND the purchase price into a single mortgage
- Improvements do NOT need to be completed prior to closing on the loan and moving into the home
- All estimates for renovation must be completed by a licensed contractor
- Available on conforming and jumbo loan products with as little as 5% down (20% on a jumbo)
- If the property is “uninhabitable” during renovation, finance up to 6 months of the new mortgage payments into the loan avoiding the burden of duplicate housing costs
This paints the picture of what’s possible. If you’re discouraged at prices for move-in ready close-in properties and are willing to work through some updates with the contractor of your choice, a renovation loan should be on your list of options.
