REGION – Did you know that 67% of prospective homebuyers said they could be convinced to buy a haunted house if it checked enough of their boxes?
The cobwebs and creaky floorboards are perfect for Halloween, but once November comes around, you may be wanting to “evict” spooky roommates that came with the house. Since fixer-uppers are typically listed at a lower price, they can be a more affordable way to create your dream home when you don’t find what you want on the market.
Usually, it is cheaper to renovate a home than it is to build one. However, depending on the scale of your remodeling project, the cost of financing either a new construction or a home renovation may be the same no matter which method you choose. That’s why if you plan on updating a fixer-upper, it’s important to talk with licensed professionals about renovation costs and renovation mortgage options.
Getting a mortgage to renovate a home is the same process as getting a traditional mortgage. The main difference is that a home renovation loan rolls the cost of your renovations into the cost of the mortgage. You can also get a renovation mortgage to update your current home, make cosmetic fixes, or add a pool. Home sellers can also utilize a renovation mortgage to make appraiser- or borrower-requested repairs.
Popular renovation mortgages for when you want to buy a fixer-upper or update your current home include:
FHA 203k – With lower down payment requirements and lower refinancing interest rates, an FHA 203k loan can be used for both cosmetic and structural repairs. And, to provide borrowers more options, it is available as FHA 203k Full/Standard and FHA 203k Limited.
VA Renovation – This renovation loan offers all the same savings as a traditional VA mortgage, with the convenience of one application, one closing, and one monthly payment. This loan allows borrowers to finance renovations for up to four units, and provides loan amounts up to $1 million.
HomeStyle/CHOICErenovation – Offered by Fannie Mae and Freddie Mac, respectively, these loans can help you buy and repair a fixer-upper, or make updates to your current home. The costs of the updates are rolled into the sales price of the property, so borrowers don’t have to open a second line of credit to make their repairs.
Other renovation mortgages include EZ “C”onventional, repair escrow, and pool escrow. If you have any questions about home renovation loans, call me and I can walk you through how they work.
Submitted by Victoria Blodgett, Prime Lending, Ludlow, Vt.