With inventory being low, some of the selections out there for potential homebuyers need a little TLC. Because of this, renovation loans are a product which must be looked at.
Years ago, I heard so many horror stories about these loans that I would just tell people about the nightmare stories I heard and that would scare everyone (including myself) away from doing them.
Not until I controlled every aspect of the lending process did I dive into understanding these loans. Now, as my company is one of the top renovation lenders in Ohio along with the other 10 states we conduct business in, I will summarize the one thing which needs to be paid attention to when it comes to a renovation loan – the contractor.
If you could get a contractor (and you only need 1, you do not need 2 or 3 or anything like that – you only need 1 quote), this loan is easy.
Take your purchase price, add the quote from the contractor, and everything works off of that number. Pretty easy.
Let’s say that you are buying for $120,000 and doing $40,000 of work, then my loan would be for $160,000. If it was FHA, the down payment would be 3.5% of $160,000. The borrower would have one single loan with one single payment, the loan closes, the work begins, the work is completed and the contractor is paid.
As my real estate agent friends walk around homes on tour and come upon houses which need some work, don’t shy away from this product. Bottom line, when you understand it, you will sell more homes, make more homeowners and make more money.
As always, call me or text me at 1-216-780-1103 with any questions, scenarios, Pre-Approvals or whatever. I do business in 11 states, we are an FHA, VA, USDA and conventional direct lender, I own the company and the buck stops with me. If you want to know if someone qualifies or not, that’s what I will give you on day 1.