Renovation Loan Guide
Congratulations on beginning your
home purchase journey! We hope this
guide helps you decide if a renovation
loan is right for you.
MEET TWO NEEDS WITH ONE LOAN
Renovation financing allows a qualified borrower to purchase or
refinance a home in less than ideal condition and make improvements
immediately after closing.
The cost of the renovation is financed into the new mortgage and
the amount of financing available is based on the value of the home
after the improvements are made “as completed value”. This financing
can be a helpful alternative to higher rate credit card or home equity
financing for many borrowers.
Between a renovation loan, refinancing to include renovation costs
or taking out an equity line of credit, you have options. Let’s explore
what those are.
WHO CAN BENEFIT?
Homebuyers can purchase homes in less than ideal condition (“as-is”)
and address problems immediately after closing.
Homeowners may upgrade, modernize or expand the home to better
serve their needs or to increase the home’s value.
Real estate agents can sell properties in need of upgrades or
properties that need repairs by helping potential homebuyers
envision remodeling possibilities.
Investors can purchase homes in need of repairs or upgrades with
low rate financing, freeing up capital for additional investment
Additionally, updated properties can typically fetch
higher rents or improve the value in the event of resale.
RENOVATION LOANS WE OFFER
*Fannie Mae HomeStyle® Renovation Mortgage
Include renovation costs in one loan, including an option for no
mortgage insurance with qualifying down payment.
*HomeStyle® for Investors
An investment-specific loan covering single unit properties with
renovation work allowed, including luxury additions.
With a low down payment, get one loan to purchase or refinance
and include rehab work.
Get up to $35,000 toward value-adding home improvements
combined with your purchase mortgage.
THE MOVEMENT MORTGAGE RENOVATION
This is what a
borrower can expect if they proceed through the renovation loan process and
qualify for the loan.
The borrower contacts
a renovation loan officer.
Product options are
discussed and the pre-approval decision is made.
Contract of sale is
executed (purchase agreement) using the actual sales
price, selected type of financing and the required down payment.
estimate is completed and the contractor or HUD (Dept. of
Housing and Urban Development) consultant submits it to the lender.
Appraisal is ordered.
Loan conditions are
cleared and the loan commitment is finalized.
The loan closes,
purchase money is funded and the associated repair funds
are held in an escrow account until renovation begins.
Renovation funds are
disbursed based on specific loan guidelines, and draw
schedule is subject to satisfactory work inspections.
RENOVATION LOAN FAQS
Aren’t renovation loans complicated and hard to do?
No, that’s a myth. Experienced professionals can make the process
seamless. In reality, it all comes down to the people that are involved
in the process.
Don’t renovation loans take too long to close?
Renovation loans have more steps than most standard purchase loans,
but it’s possible for them to close in 30 days or less.
If I’m getting a renovation loan, do I need to order a home inspection?
The Standard FHA 203k requires an inspection by a HUD-approved
consultant the Lender will provide, however the borrower can order
an additional home inspection if they desire (Common on a Purchase).
Can a renovation loan be used to renovate a condominium?
Yes, but certain restrictions apply to condominiums. Restrictions are
based on the number of units experiencing renovation at one time,
limiting interior renovation work and the number of units in the project.
Ask a Movement renovation specialist for details.
How long before repair work can begin?
Work must begin within the first 30 days of the loan closing and
can begin as soon as the renovation escrow account is set up and
proceeds are disbursed.
What is a typical timeline of repairs?
Work should begin within 30 days of closing and must be completed
in a six month period. It can’t stop for intervals greater than 30 days.
Is the home ready to move in as soon as the loan closes?
If the home is livable per county and city regulations and no mortgage
payments are financed in the loan by Movement Mortgage (optional
on certain loan programs), the home is ready to move into.
ABOUT MOVEMENT MORTGAGE
As one of the 10 largest retail mortgage lenders in the U.S., Movement
Mortgage exists to love and value people by leading a Movement of
Change in our industry, corporate culture and communities.
Our innovative mortgage process is a game-changer, serving real
estate agents and homebuyers with true excellence and efficiency.
Movement employs more than 4,500 people and has more than 650
branches in the U.S. spanning 48 states. Our non-profit organization,
the Movement Foundation, has reinvested more than $30 million in
communities to date.