HomeStyle Renovation Mortgage is a new financing option for those buyers that find the home they love but is missing a few essentials upgrades. You can now finance those repairs into your mortgage when you buy a home. So the flooring you don’t like or the granite counter tops you wish the home had can now be installed so your new home is exactly as you want it.
As a Realtor, many buyers fall in love with a home but there is usually something they want to fix or add to make it there own. The HomeStyle Renovation Mortgage allows buyers to do just that. HomeStyle Renovation Mortgage provides a convenient and economical way for borrowers to make home improvements, renovations or repairs with a single- close first mortgage rather than a second mortgage, home equity line of credit or out of pocket cash.
The loan amount is based on “as-completed” value of the home rather than the present value.
15-30 year fixed rates
Eligible borrowers include individual home buyers, investors, nonprofit organizations and local government agencies.
Loan to value ratio is based on the lesser of: 10 purchase price and cost of renovation, or 20 the “as-completed” value.
Borrower must choose his or her own contractor to preform the work and lender must approve the contractor to determine if they are adequately qualified and experienced for the work being preformed.
Plans and specifications must be prepared by a registered, licensed, or certified general contractor, renovation consultant, or architect. The plans and specifications should fully describe all work to be done and provide an indication of when various jobs or stages of completion will be scheduled (including both the start and job completion dates).
Borrowers can perform the renovation work themselves at the lender’s discretion, provided that: The Do-It-Yourself financing does not exceed 10% of the as-completed value. Note: Inspections are required for all work items that cost more than $5,000. The property is a one-unit owner-occupied home. The reimbursement is limited to the cost of materials or the cost of properly documented contract labor (sweat equity may not be reimbursed).
Renovation costs are limited to 50% of the “as completed” appraised value of the home. Renovation costs may include: • Labor and materials • Soft costs (architect fees, permits, licenses) • Contingency Reserve (10% of the cost of labor, materials, and soft costs for unforeseen extra costs in the renovation). The 10% contingency reserve is optional unless the property is a 2- to 4-unit home. • A payment reserve of up to six months PITI is permitted when the borrower must vacate the property during renovation. The amount can be financed in the loan amount if the value will support such financing. The reserve is allowed only for the period in which the property is uninhabitable due to the renovations. • A contingency reserve of 10% of the hard and soft renovation costs is required for two- to four-unit properties; the contingency reserve may be financed or it may be funded separately by the borrower.
The renovation and contingency funds must be placed in an interest-bearing custodial account. • The lender must manage the renovation funds during the work. • Once the work is complete, the lender must obtain either a HomeStyle Completion Certificate (Form 1036) or an Appraisal Update and/or Completion Report (Form 1004D) as evidence of completion.
For more information please contact me for details and I will have one of my preferred lender give you a call.
Realtor, Laurel (Nielson) Jonas 480-229-5861 RealtorLaurelJ@gmail.com