Using Green Renovation Loans
Foreclosures & Short Sales in disrepair, dilapidated, outdated, tired and, for the most part, deeply discounted litter the American landscape. Leaky roofs, dated kitchens, mildew, water guzzling bathrooms are just a few of the problems you’ll find.
Enough to scare away buyers and lenders alike. However, the savvy home buyer, armed with the knowledge ofFHA 203K, HomePath&Fannie Mae HomeStylerenovation loan capabilities, looks at a dump and see’s something different, they see OPPORTUNITY!
So how do you benefit from today’s foreclosure driven landscape? You buy CHEAP, you RENOVATE GREEN, you create INSTANT EQUITY and you SAVE every month you own that home.
Sounds easy right? Between LENDERS who lack the products and the expertise and Realtors who lack vision putting together a smooth and PROFITABLE transaction comes down to a few key components:
Choosing Your Team
Do your research. Specialty loan programs likeFHA 203K, HomePath Renovation andHomeStyleare not available at very many lenders.
The ones that do offer them have few mortgage loan officers that specialize. Ask questions, find out who is disbursing the draws and how many renovation loans they closed.
Don’t stop there though, Google their NAME,check theirLinkedInand read their blog posts. Don’t end up an internet horror story, choose the RIGHT LENDER.
Realtor selection is equally important. If you have selected the right lender then chances are they will know a Realtor with the right vision and expertise to help you successfully navigate the property selection and negotiation side of a renovation transaction.
Property Selection
What property type will maximize my return? This one is easy, you have to look for properties not eligible for traditional financing. These properties MUST HAVE a renovation loan to be financed, sans that the offer better be cash.
Pick out the dumps, the homes that have been vandalized or ugliest house on an otherwise beautiful block.
How Will My Renovation Loan Work?
From a credit standpointFHA 203K, &HomeStyle Renovationloans are pretty much the same as their traditional purchase cousins. The loans (and the expertise needed to do them) lie in the property piece of the deal.
What Are the Best Ways to Make my Renovation Green?
Start with theBATHROOM. Dated homes have water guzzling bathrooms, that’s a fact. In some areas of the country, like DeKalb County in Metro Atlanta, you don’t have a choice but to renovate those bathrooms. Low flow ordinances REQUIRE you to cut down on your water waste.
Bathrooms are not the only energy suck, kitchens and their appliances, HVAC systems and energy efficient windows are all excellent renovations you can easily do to save thousands on your annual energy bills.
I offer up a few ideas HEREandHEREon how to RENOVATE GREEN.
How Do We Tell if What Our Energy Savings are Going to Be?
That’s easy, get a HERS (Home Energy Rating) Report.RESNEThas a comprehensive list of energy raters in your area, that is always the first place I start my HERS report search. You can also find green certified contractors there!
Loan Is Closed! How Is the Renovation Escrow Disbursed?
Depends on the type of loan you have chosen.
The draw process for the Consultant FHA 203Kand theFannie HomeStyle aresimilar. They require a 3rd party to inspect before funds can be released.
You’ll typically have between 2-5 draws depending on the scope of work and finances of your contractor. The first draw will typically NOT be released until all the permits are in place. In other words get your PERMITS FIRST!
On the Streamline 203K and the HomePath Renovation you’ll get between 35-50% of the funds upfront and the rest when the work is completed and inspected. I have a more detailed article on theDRAW PROCESSunder the link.
Taking advantage of this FORECLOSURE driven market is as easy or hard as you make it. If you’ve followed the advice above, selected your team correctly and picked the right property you can PROFIT BIG!
More From 203K Mortgage Loans
- How to Write a FHA 203K Purchase Offer | 203K Loans | HomePath Renovation Mortgages – Georgia, Florida, Alabama, SC
- 10 Ways Renovation Loans Create HUGE Value | 203K Loans | HomePath Renovation Mortgages – Georgia, Florida, Alabama, SC
- FHA 203K Loans – The Process
203K Mortgage Loans Recommends
- FHA 203k Streamline: Why Choose The FHA 203k Streamline? (Arizona Mortgage Team)
- Buy a House with Low Down, No PMI, No Appraisal? Yes! Welcome to HomePath. (Arizona Mortgage Team)
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