Friday, December 5, 2014

203k versus HomeStyle Renovation Mortgage

These two loan programs each have their place in your business. When do you know which one is the best for your client?

FHA 203k typically is for lower credit scores or clients with smaller down payments or both. Loan limits in many Bay Area Counties is up to $625,500 for a SFR and over $1.2MM for a fourplex. That should work on a four-plex in Marin County.

Where can you get financing for a "mixed use building"? Easy, the FHA 203k comes to the rescue. These are all 3.5% down... mixed use loan with 96.5% financing. That is fantastic. This is an "owner occupied" loan program.

Why would you use a HomeStyle Renovaton Mortgage?

A little higher down payment, about 5% instead of 3.5%. The big difference is there is no PMI, private mortgage insurance.

This product can be used for second homes and investor properties. You already own a rental and it was trashed after the last tenant moved out... this might be the loan program for you.

My client is buying a fixer for $1,250,000 or more... 

I am dealing with a home that has a purchase price of $1,250,000 and it needs lots of work. My client is putting allot of cash into the home.  This is perfect for a 203k or HomeStyle Renovation loan to get up to $625,500 to make the repairs.

The HomeStyle Renovation Mortgage is for people with good credit that need money for their renovation project. Some use it to purchase and renovate their home others use it to refinance and renovate their home. If you have sold a home in the past few months that needs repairs, you could be the hero and let that client know if they need financing to make those repairs we have some low interest money fixed rate for thirty years to solve that problem.

There are some other products out there that secured by a second mortgage if you need up to $75,000 to complete a project and ran short of funds.  I just heard about an unsecured loan product that will provide $40,000 to complete a project. Lots of stuff coming up in the new year.