Some of my clients have expressed interest in buying a "fixer upper". Often times, buying the "ugly duckling" in a nice neighborhood is a great investment because you get to buy a home that is priced well below what the house will sell for after the renovations. One hurdle with a "fixer upper" can be the cost of renovation.
Did you know that there is financing available to assist you with the renovations whether you plan to live in the house or just be an investor? I'm talking about a financing that could be less expensive than a home equity line of credit (HELOC) on the acquired property. With some loan programs, the renovation costs can be rolled into the loan you use to acquire the property.
Have you heard of any of the Renovation Loan programs?
1) Homestyle Renovation Mortgage allows you to make renovations, repairs and improvements totaling up to 50% of the as-completed value of the property with a first mortgage rather than a second mortgage, home equity line of credit and other more costly financing. The funds can be used for any repairs or renovations that are permanently affixed and add value to the property. Your lender must be approved by Fannie Mae to offer this product, and there are some major players, such as Wells Fargo, that still offer it.
2) There's also the FHA 203K loan. This program is great because it could allow you a maximum mortgage amount of $729,750 with only having to put 3.5% down and possibly roll in your closing costs and repair costs. The loan cannot exceed 110% of the "as-improved" value of the property. Up to 6 months of the mortgage payments can be financed while the home is renovated and uninhabitable
If you'd like to find out more about either of these programs, I am more than happy to connect you with some of my preferred lenders. I also can help you with some of the other nuances of buying a "fixer upper". Feel free to call (310.482.2414) or email me (marcelanderson@kw.com) for more information.
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