Imagine you are interested in purchasing a home that needs structural work, foundation work, mold remediation, lead-based paint stabilization or other repairs in order to satisfy appraisal requirements – and the sellers are not able or willing to make these repairs prior to closing.  Maybe the home itself is structurally sound but not quite big enough.  Or you don’t like the vintage 1980’s kitchen, bathrooms, flooring, windows, etc.  This may even describe the home you already own and live in.  What if this home could be your dream home if these updates were completed?

With our CIMG Renovation loan, you can purchase or refinance a home and roll in the costs to make home repairs, improvements, renovations, or add an addition, enabling you to pay for the work over time – as long as the project adds value.

Older homes that need updates tend to have character, well-established landscapes, larger lot sizes, and be located in desirable neighborhoods.  But older sellers may have gone a long time without updating their home, and when they list the home for sale, the old bathrooms and kitchen in particular can be a turn off.  Home buyers will compare the older home with a newly built home and find that the home that needs work seems a lot less desirable – and thus sits on the market.    This is where a renovation loan can give you an edge.

Key Points

  • A renovation loan may enable you to purchase a home that can perfectly meet the needs of your family once your project is completed.
  • If the home you already own needs updates or an addition, a refinance may be able to make your dream project possible.
  • Working with a variety of experts that you select and that we approve – the project starts with your design plans, a project timeline, a detailed cost breakdown provided by your general contractor, and an appraisal of the completed value.
  • The cost of the project is rolled into your mortgage – so you don’t have to deplete savings or finance the work with more expensive types of credit.
  • At closing, the seller is paid the full purchase price, and the balance is dispersed to your general contractor through monthly draws as the work is completed.
  • You will get started on the work immediately after closing so you can complete the project within the 9 months allowed.
  • Your regular mortgage payments begin as soon as the loan closes, with the financing of the renovation included in one single payment.
  • Available for 1 to 4 unit primary residences, and 1 unit Second Homes and 1 unit Investment Properties.
  • Fixed Rates and ARMs are available.

I have experience with renovation loans and can help you determine if a renovation loan is right for you and your project.  To begin the process, CLICK HERE to complete my secure online loan application and we can review your needs and begin the loan approval process. 

 

Here is an example of how the maximum loan size calculation is made:

Maximum Loan Size Calculation Example A Maximum Loan Size Calculation Example B
If the project appraises for less than the project cost. If the project appraises for more than or equal to the project cost.
Purchase Price of home $325,000 Purchase Price of home $325,000
Estimated Renovation Cost $45,000 Estimated Renovation Cost $45,000
Renovation Project Acquisition Cost $370,000 Renovation Project Acquisition Cost $370,000
Appraised Value of Renovation Project $365,000 Appraised Value of Renovation Project $375,000
(The project appraised for LESS than the actual cost) (The project appraised for MORE than the actual cost)
In order to avoid mortgage insurance: In order to avoid mortgage insurance:
Max Loan Size is 80% of the Appraised Value. Max Loan Size is 80% of the Renovation Project Cost.
Appraised Value of Renovation Project $365,000 Renovation Project Acquisition Cost $370,000
80% Loan Amount $292,000 80% Loan Amount $296,000
Down Payment Amount $78,000 Down Payment Amount $74,000

Note – the loan CAN be larger than 80% LTV with the addition of mortgage insurance.

Please call me at 919-929-6194 if you’d like to discuss whether a Renovation Loan is right for you.

 

IMPORTANT NOTES:

  1. For very large projects, a Construction Loan may be an alternative option.
  2. Municipal permit requirements must be met.
  3. Buyers cannot act as General Contractors.
  4. Buyers cannot do the work themselves.
  5. No Historical Properties, with case-by-case exceptions.
  6. No Manufactured Housing
  7. This is not a tear-down-reconstruction program or a flipping program.
  8. Work must begin within 30 days of closing, may not cease for more than 30 days, and be completed within 9 months.