Let's Buy a House!
Let's Buy a House!
Home Renovation Loans
What is a home renovation loan? Are they complicated? How can you get one and why do you need one?
I answer all these questions about Home Renovations loans. They are surprisingly easier than I thought they would be.
Welcome to Let's Buy a House, the podcast. I'm your host, Miriam Gilmore, and I am so excited that you decided to join us on this podcast journey. Here. We'll talk all things about buying a house, but more importantly, how to get there, your credit down payment, how to save money, all the things. I wanna be a resource for you. Here we go. Okay, so today I'm gonna be talking to you guys about renovation loans, and the reason that I wanted to get into this and talk about this is because honestly, until my client came to me and talked to me about this and asked me if I did renovation loans, I kind of thought like, well, that's too complicated. I really don't want to get into that. It's complicated, and I kind of uncom. doing the regular stuff that I do and the regular loans that I do, I was in my comfort zone, so this customer of mine came and she a, actually happens to be a realtor as well, and said, Miriam, there's this loan and I can buy a house and they will finance the repairs of the home. And I'm like, okay, I've heard about this a million times, but I thought it was too complicated. Right. We dug in and because she's my friend and also a realtor and we do a lot of transactions together, of course I wanted to make her happy. And I also, it piqued some curiosity. So I said, well, let me dig into this. So I started to do some research and really dig in and see what was needed to do this loan. And I connected with one of the lenders who really specializes in this type of loan. And he was instrumental in helping me put this together. But honestly, I'll be complet. Frank with you? It wasn't as difficult as I made it out to be in my head. So it was actually not as hard. On the loan side. It was just very basic, like your regular stuff, W two s pay stubs. She happened to be self-employed, so we needed two years of tax returns and a p and l. So it was actually. Really your basic documentation for any transaction than you would do now, the, the, the contractor component and the piece for the renovation, that was a little bit more intricate and more complex, but it wasn't really something that me, as the loan officer had a lot to do in that area because what I didn't realize is that when the contractor comes in to play, He's really gonna be the person that deals with the renovation team from the lender to get them what they need. So I wanted to know a little bit more about it, and I looked more into the, the cost and the repairs and that type of thing because I really wanted to learn about it. But the reality was is that they really didn't need my input as to what he could do or what he had to do. It was basically me guiding him with the documentation to present to the renovation underwriter. So it was actually really. Not difficult at all. And this contractor happens to have experience with renovation loans, where he knew what he was doing so that, that helped also. I just think it's a great loan program because here's the thing, when you go out and look at properties, More often than not, you might like the layout, but you might think, well, the kitchen's outdated, or that bathroom, I hate the blue that that bathroom has and I wanna redo it. But a lot of times, a buyer, comes to the to the closing table. They have basically, The money for down payment plus closing costs, and sometimes that's even tight. But in this particular situation, the way that this loan works is that it finances the repairs into the loan. So as long as you qualify for the after repaired value, the the cost. let me give you an example. So if the house is worth$400,000 and, or let's just say you're buying it for 400,000, and after you redo the. And the kitchen, let's just say that's$75,000 worth of renovations. So you put,$75,000 in of renovations. And now let's say that value because you rided the bathroom and the and the kitchen, the value of the home, when an appraiser comes out is now gonna be higher because of this update, right? So, so long as that update allows where your value now, That the lo, this sounds so complicated, but basically 96.5% of the value is what they'll lend you, right? With the repair included. Does that make any sense? I, I feel like I need to put in a little edit in here. And add some numbers so you can understand it. But nonetheless, it's a very good loan option. And the bottom line is, is that you can finance the expenses of repairing kitchens and bathrooms and all that within the loan, as long as it meets, the guidelines and that you're within. that dollar amount. I think it's a great program. I think it opens a lot of opportunity for people who want a house that they can kind, actually, I said a house, but you could even do this with a condo. So that is another thing that I thought was awesome because a lot of times these con, you might buy something and you might want new floors and you might want. New bathrooms. So I think that this is the perfect loan for somebody who wants to make the property, make it look their own. And it's just a nice way to finance that cuz if you've saved all the money for down payment and closing costs and you just don't have enough to fix it up and you gotta wait. So many people go in and you have to wait so long. But if you have the income and you have the ability to make the payments and you can finance it in there, why not get it all? In one shot. I hope that you find this beneficial and that it makes. And if you have questions, I'm always here to answer them. I wanna thank you for joining me on this episode of Let's Buy a House, the podcast. It's always my joy and honor to have you as a listener, and I would love nothing more that if you have found value and you enjoyed this podcast that you'll share with your friends, maybe leave a review. It's always such a nice thing to hear from you guys. I'd love nothing more than to connect with you guys on other platforms like Instagram, Facebook, and my personal favorite. TikTok, I'll see you next time on. Let's buy a House, the podcast.