I am amazed reading the ads for homes for sales that are fixer-uppers or handyman specials. Sometimes it clearly says it, other times, it says something like needs tender loving care (TLC) or lots of potential or even words like quaint or partially finished anything.
But the best part of all is when the person wants to buy and do it themselves with no down payment and no cash reserves, and no real plan. That sort of lending (for anything major) is hard to find. Basically, you would have to have an appraiser turn a blind eye, since most types of loan require at least minimum standards. Those standards include possibly no ongoing maintenance issues like peeling paint, or minimum standard safety upgrades such as GFCI outlets (Ground Fault Circuit Interrupters) or upgraded electrical.
Maybe you think this will never happen to you, but even if you just want a few upgrades, you should consider a renovation loan. Why a renovation loan?
Well, as I have explained in previous blogs, there are several main advantages:
1) One payment instead of the complications of a second mortgage, home improvement store loans, or credit cards.
2) More importantly, the renovation loan considers FUTURE value, after repairs. This is the most important part of the equation. Any typical purchase mortgage loan normally goes by appraisal value or purchase price, the LOWER amount. The renovation loan considers the after repair value, which can potentially help a lot.
3) There are so many projects that can be done, really your imagination and the future value are the key considerations to keep in mind. After that, a consultant or a good contractor can help you put that dream in the form of a quote. That quote then becomes your guide to make key decisions and have the future appraisal done.
4) Last, but not least, if there is a 1-4 family, or rental property possibility, renovation loans can really help. Even fewer lenders do this type of lending with so little down. Most buyers can get as low as 3.5% down…
So many good reasons to get a renovation loan instead of looking for other, more limiting forms of financing. Get started with your favorite renovation lender here.