The Basics | Renovation Loans
A renovation loan can be used to purchase a home or refinance an existing home. A HomeStyle Renovation Loan from Signet Mortgage can be used to improve an investment property too! A renovation loan is based on the improved value of your home making it a valuable alternative to a construction loan.
You can arrange for funds over and above the purchase price of your new home to remodel, make repairs or add a room! A refinance will pay off your existing loan, and provide additional funds for a wide range of improvements – let your imagination go! A renovation loan is a perfect way to fix up a property or add that extra bedroom you need for your growing family.
There are several basic types of Renovation Loans:
HomeStyle loan from Fannie Mae – my favorite as it allows a loan to value up to 95%, does not have upfront mortgage insurance and is underwritten to standard Fannie Mae guidelines. The loan is based on the improved value of your home AFTER completion – so you will have the resources to make it your dream home!
FHA 203(k) loans come in two “flavors” …
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- Streamline 203k – Renovation costs generally limited to $35,000. The work can be done by the homeowner or contractors. Typical renovations include painting, carpet, and replacement of appliances. This loan does not require a HUD counselor and is very close to the cost of a normal FHA loan.
- Full 203k – Renovation costs are only limited by the FHA loan limits for the county. The renovations are generally more extensive so they require the assistance of a general contractor. An FHA Consultant is involved to ensure the project proceeds according to plan. Remember, the loan is based on the improved value of your home AFTER completion – so you will have the budget to renovate your dream home!