With a limited supply of homes for sale, many potential buyers can’t seem to find that perfect home layout. Or they find a home that meets most of their geographic needs (great location, schools etc.…) but needs updating. But what if you approached your home search from a different perspective? What if you could transform that house into everything on your wish list? In recent years, guidelines for these loans have eased to make this very much a reality. Renovation loans allow you to borrow based on the future value of your home after renovations. This means you can access more funds to cover the costs of extensive improvements, whether it’s updating a kitchen, adding a bathroom, or creating a new living space. With these products, you can bundle the costs of purchasing and renovating into a single mortgage. Best yet, with a well-planned renovation, you will see a significant increase in the value of your new home! Talk to your Realtor about expanding your search to include homes that you might have passed by initially and approach them with a new set of eyes. There are two types of these loans:
- an FHA streamline 203K, which allows you to borrow up to $75,000 for most improvements that are not structural in nature. With this loan you can borrow up to 96.5% of the estimated “As Completed Value” of the home.
- For more substantial renovation projects, Fannie Mae offers the Homestyle Renovation loan. This loan allows for much larger loan sizes and will go up to 97% of the “As Completed Value” of the property. These products work just as well for any renovation you have been contemplating for your existing home.
Give us a call to learn more about these excellent options and how they work. Also, if you need to access equity for debt consolidation or anything else, feel free to give us a call to explore options for a home equity line!
Mortgage & Housing Update:
With all the craziness going on in the election cycle, we thought we would bring you up to speed on what is happening with rates and where we might be headed. In the last month, rates for the best borrowers have feathered down into the high 6% range on a 30-year fixed rate. This is happening because inflation is continuing to show signs of abating, job growth is slowing, unemployment is ticking up, and the Federal Reserve is telegraphing that they may start to reduce short term rates soon. Most in the financial world believe they will start the rate reduction cycle in September but wait until after the election for the second rate cut. However, long-term mortgage rates will be driven by what happens with inflation, the job market, and the overall strength/weakness of the economy. Assuming these continue to weaken, we will see mortgage rates continue to moderate (which is consistent with the current narrative). A lot of folks ask what will happen if so and so wins the election. Honestly, we don’t think it matters one way or the other unless one party gets complete control of the House and Senate. The candidates can talk all they want about all the wonderful things they are going to accomplish but the most significant policies won’t happen without the approval of Congress. So, there’s a good chance we will be right back where we started, in a logjam. Housing prices continue to go up slowly with the inventory problem still front and center. Inventory has gone up slowly. Deals are happening again with this uptick in houses for sale. As we have mentioned before, now is an opportune time to start looking for a home if you are thinking of making a move before rates dip again. There is significant pent-up demand from all the people who have wanted to move over the past 3 years but have held off due to high interest rates. Once the rates come down (and it won’t take much), you will see demand spike again and we will be back to bidding wars. Our guess based on many recent conversations is that a lot of fence sitters will be back in the game once we get back into the low 6% range. If you get ahead of the stampede, you can always refinance later as rates moderate.
“Home is what you take with you, not what you leave behind.” — N.K. Jemisin
