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You looked at 25 homes, made 10 offers and now you own a new home. Over the past 5 years, millions of homes have been sold to new home buyers in what seemed like minutes. When you have a market such as the one we are in right now, when there is low inventory and more buyers than sellers, people make snap decisions.
I’m sure many of you had home inspections, pest reports and roof reports and still decided to buy even when there was obvious damage. Sellers everywhere have figured out they can sell you a lifetime of their home maintenance problems because you have no choice. Ordinarily in a normal market as a buyer, you would have time to review these reports and negotiate a better a deal with the seller on repairs. After all what other options did you have?
You could have used the Fannie Mae HomeStyle Conventional Renovation loan or the FHA 203 K Renovation loan at the time of purchase. There is a special renovation loan specifically for Native American Indians. Each of these renovation loan products could have been implemented prior to your closing so that when you moved into your home, all the work has been completed. Many sellers were not willing to negotiate repairs or the time necessary to set up a repair or renovation transaction. This is where your realtor or lender could have advised you these loan products are available to immediately renovate post close. What can you do today to make it possible to renovate your home?
Now that the fog has cleared and you are sitting in your kitchen trying to figure out what do I do now? The main blessing of this extraordinary market is that your home has gone up in value whether you have made repairs or not. Is it time to renovate, remodel or add space?
There are 2 well known programs to accomplish the dream of making your home your new palace. The Fannie Mae HomeStyle Conventional Renovation loan and the FHA 203 K Renovations loan will accomplish just about any remodel you may have in mind. When refinancing into either loan the equity requirements are very low. You will be required to have a licensed contractor bids or estimates of repairs provided. All work must be completed by a licensed professional.
Getting started for a new home purchaser or and existing home owner is the same. What type of renovation do you want to accomplish? What is necessary for your simple quality of life. What is required for your home to meet local code? Do you need a new kitchen, bathrooms, carpet, paint and more? Is the roof at the end of its life? These are just a few of the questions you get to ask yourself when you know you can obtain the financing necessary to make your home your dream home!
Some rules and requirements to follow. When you have your list of what you want, and need completed, you then bring in your contractor to bid the job. The contractor must be currently licensed, have $1 million in liability insurance and have the capacity to begin the renovation without an advance of funds. All bids must have a full listing of the work to be completed, labor & materials cost with profit and overhead clearly shown.
This type of renovation financing has what are known as “progress payments” made out to the homeowner and the contractor as renovation work is completed. Each phase of the work as completed may have a draw of funds request signed off for a progress distribution. Part of the CA State law provides that a contractor to begin a job cannot receive more than 10% of the estimated job bid or $1000, whichever is lower. Each milestone the contractor completes draws down the renovation account until the work is finished. Remaining funds can be used for changes and additions or credited to reducing your mortgage balance.
Renovation can be the answer instead of moving to get the beautiful home you really want and deserve.