Home improvement loans in 2020. 4 Different loans to choose from.

There are 2 renovation loan products/programs in the marketplace today, known as the FHA/HUD 203k, and Fannie Mae Home-Style who will finance your home renovation project.

Both financial institutions allow their clients to purchase a home or refinance an existing property while including home remodeling cost while leveraging future equity built up by the proposed renovation that you can borrow against upfront or before to the renovation being started.

Fannie Mae Home Style

Like the 203k, Home-Style Renovation mortgage offers an easy way for clients to make renovations, repairs, or improvements totaling up to 50% of the when-completed appraised value of the property with a first mortgage, rather than a second mortgage, home equity line of credit, or other, more costly option. Borrowers who can qualify include individual home buyers, investors, nonprofit organizations, and local governments or agencies. Mortgage insurance can be removed after reappraised with value-creating a <78% Loan to value.

Benefits to Borrowers:

A very effective way to renovate their homes. A single mortgage means lower closing costs and typically a lower interest rate on a first mortgage. Borrowers can qualify for CLTV of up to 105% with eligible Community Seconds® subordinate financing Loan amount based on “as-completed” value of the home or the cost basis (purchase money loans), whichever is smaller.

HELOC

A home equity line of credit

(HELOC) is one option to tap into the value a homeowner has built up in the house. Proceeds from a home equity line of credit are often used to pay for home remodeling, a new car, education expenses or loan consolidation. A home equity line of credit is a flexible way to borrow against a home’s value. When a homeowner applies for a home equity line of credit the size of the line will be determined by the amount of equity in the home and the credit situation of the homeowner. The bank will have a limit on the amount of equity above the current mortgage a HELOC can access. For example, if the bank has a 90 percent loan to value limit for lines of credit and a homeowner has a first mortgage for 80 percent of the home’s value, the line of credit could be for a maximum of 10 percent of the home value. There are two major benefits to home equity loans; The rate of interest on a HELOC will usually be lower than the rates on credit cards or other types of unsecured debt. Also, the interest paid on a HELOC may be tax-deductible. The tax code allows homeowners who itemize their deductions to deduct the interest paid on up to $100,000 of home equity debt.

203K Renovation Loans

The FHA 203K type of loan is insured by the Federal Housing Administration. It allows the home buyer to immediately turn the house they’ve purchased into the house they always dreamed about by adding or renovating a bathroom, updating kitchen cabinetry, renovate or extend the square footage, make repairs and more, all with a single loan at attractive first mortgage rates. It allows them to obtain both a loan to purchase and remodeling financing in the same transaction. Before this loan program, a home buyers had to obtain a first, temporary loan to purchase the home and a secondary renovation home loan to make any necessary repairs. Only after the repairs were complete could the home buyer gain permanent financing for their newly improved home. 203K Loans exist not only for repairs and renovations, but they offer a wide range of benefits to home buyers, while still only requiring a 3.5% down payment for qualified first time buyers. For instance, they can be used to update or renovate a house, to refinance or to take care of inspection problem, including structural or foundation issues. The buyers could scrape and rebuild a home. They can also be used in conjunction with first time home buyer programs such as CHFA, CHAC, HUD $100 down, and more.

Other benefits of 203K Loans:

Clients can still close in as little as 30 days, and renovation can begin immediately after closing. There are no special improvement requirements or repair restrictions. Luxury items such as pools and spas also may be included in the home remodeling. This gives you the option and ability to truly make it your dream home design. The loan amount is based on the value of your house after the renovation have been made. More money = more home remodeling = more value. The home purchase and updates are financed simultaneously, so renovation costs are spread out through the entire term of the loan, giving the home buyer lower monthly installments. There’s just one application, one set of fees and closing costs and one monthly payment for this type of loan. This means easy access and convenience and less hassle. Low appraisals can be increased by 10% or more. Any amount of funds left over once the project is completed is removed from the principal balance of the loan.

There are two types of FHA 203K Loans:

203(k’s) (streamline); and Full 203(k).

The full 203k is required for anything requiring structural changes or heavy remodeling. It may be used for additions such adding a extra floor, room additions or enlargements, garage additions, etc. The full can be used to completely demolish a house and start over.

The streamline 203k has a cap of $35,000 (including all fees). It is designed as a basic “refurbish and renovate” loan for clients to finance non-structural and cosmetic only home renovation.

Line of Credit

In addition to the 203K financing, a home remodeling financing with the Home Projects® Visa® program offered by Wells Fargo Financial National Bank. This offers the benefits of choices from a few different payment options. Wells Fargo Financial issues the Home Projects® Visa® Card and extends credit under the Home Projects® Visa® Credit Card utilizing an unsecured line of credit up to $25,000 based on your credit ability. Home Projects® Visa® program is an easy way to pay for your home remodeling purchases. Plus, as a Home Projects® Visa® cardholder, you can enjoy exclusive special offers throughout the year, such as:

No annual fee.

Deferred payment options and interest promotional offers (6.9, 9.9, or 12.9% APR).

No-interest option with equal monthly installments (loan amount spread over the full term with equal payments).

No-interest option with minimum monthly payments (3.5% min monthly payment of loan amount). Reduced interest with monthly payments.

Regular terms with regular payments.

Deferred and low monthly payment options. Advance notice of Home Projects Visa events.

An open line of credit for all your home renovation needs.

Convenient monthly payments.

Quick credit decision.

Everyday purchase convenience.

Easy quick add-on Purchase.

SITL Home Renovation, Design and Real Estate Services info@SITLgroup.com