Buy it, fix it…with a renovation loan
With over a decade of experience in renovation loans, we can guide you through the process of turning that almost perfect house into the dream home you and your family deserve. At Intercounty Mortgage Network, we offer a variety of renovation loans and construction loans in New Jersey. From the ever popular FHA 203k rehabilitation loan, to a FHA streamlined 203k construction loan, to the FHA 203h mortgage insurance program for disaster victims, to a one time close modular home loan, to the Home Fixer Repair Escrow program, and our HomeStyle Renovation Loan, Intercounty Mortgage Network has a renovation loan program to fit your specific needs.
FHA 203k Rehabilitation Loan
The Federal Housing Administration (FHA), which is part of the Department of Housing and Urban Development (HUD), administers various single family mortgage insurance programs. These programs operate through FHA-approved lending institutions which submit applications to have the property appraised and have the buyer’s credit approved. These lenders fund the mortgage loans which the Department insures. HUD does not make direct loans to help people buy homes. The Section 203(k) program is the Department’s primary program for the rehabilitation and repair of single family properties. As such, it is an important tool for community and neighborhood revitalization and for expanding homeownership opportunities.
Most mortgage financing plans provide only permanent financing. That is, the lender will not usually close the loan and release the mortgage proceeds unless the condition and value of the property provide adequate loan security. When rehabilitation is involved, this means that a lender typically requires the improvements to be finished before a long-term mortgage is made.
When a homebuyer wants to purchase a house in need of repair or modernization, the homebuyer usually has to obtain financing first to purchase the dwelling; additional financing for the rehabilitation; and a permanent mortgage when the work is completed to pay off the interim loans with a permanent mortgage. Often the interim financing (the acquisition and construction loans) involves relatively high interest rates and short amortization periods. The Section 203(k) program was designed to address this situation. The borrower can get just one mortgage loan, at a long-term fixed (or adjustable) rate, to finance both the acquisition and the rehabilitation of the property. To provide funds for the rehabilitation, the mortgage amount is based on the projected value of the property with the work completed, taking into account the cost of the work. To minimize the risk to the mortgage lender, the mortgage loan (the maximum allowable amount) is eligible for endorsement by HUD as soon as the mortgage proceeds are disbursed and a rehabilitation escrow account is established. At this point, the lender has a fully-insured mortgage loan.
FHA Streamlined 203k Construction Loan
FHA’s Streamlined 203(k) program permits homebuyers and homeowners to finance up to $35,000 into their mortgage to repair, improve, or upgrade their home. Homebuyers and homeowners can quickly and easily tap into cash to pay for property repairs or improvements, such as those identified by a home inspector or an FHA appraiser. Homeowners can make property repairs, improvements, or prepare their home for sale. Homebuyers can make their new home move-in ready by remodeling the kitchen, painting the interior or purchasing new carpet.
FHA 203h Mortgage Insurance Program For Disaster Victims
The Section 203(h) program allows the Federal Housing Administration (FHA) to insure mortgages made by qualified lenders to victims of a major disaster who have lost their homes and are in the process of rebuilding or buying another home. This program provides mortgage insurance to protect lenders against the risk of default on mortgages to qualified disaster victims. Individuals are eligible for this program if their homes are located in an area that was designated by the President as a disaster area and if their homes were destroyed or damaged to such an extent that reconstruction or replacement is necessary. Insured mortgages may be used to finance the purchase or reconstruction of a one-family home that will be the principal residence of the homeowner.
Like the basic FHA mortgage insurance program it resembles (Section 203(b) Mortgage Insurance for One to Four Family Homes), Section 203(h) offers features that make recovery from a disaster easier for homeowners: No down payment is required. The borrower is eligible for 100 percent financing. Closing costs and prepaid expenses must be paid by the borrower in cash or paid through premium pricing or by the seller, subject to a 6 percent limitation on seller concessions.FHA mortgage insurance is not free. Mortgagees collect from the borrowers an up-front insurance premium (which may be financed) at the time of purchase, as well as monthly premiums that are not financed, but instead are added to the regular mortgage payment. HUD sets limits on the amount that may be insured. To make sure that its programs serve low and moderate income people, FHA sets limits on the dollar value of the mortgage. The current FHA mortgage limit can be viewed online. These figures vary over time and by place, depending on the cost of living and other factors (higher limits also exist for two to four family properties).
One Time Close Modular Home Loan
Intercounty Mortgage Network offers Construction to Permanent loans for new modular homes. Our One Time Close Construction Loan for Modular Homes program provides construction financing, lot purchase and permanent loan, all wrapped up in one loan. Why worry about re-qualifying, re-appraisals or incurring additional costs? Intercounty Mortgage Network provides interim financing and administration for true one-time close staged funded construction-to-permanent loans. Designed for manufactured and modular housing, this programs allows Intercounty Mortgage Network the ability to offer our clients this unique loan product.
Intercounty Mortgage Network will work with underwriting and approve the permanent portion of the loan before the construction begins. The construction portion of the loan is also underwritten and approved. When all conditions for closing are cleared with Intercounty Mortgage Network, other than the final construction related conditions, the closing will be coordinated. Once closed, construction can begin. Because the permanent loan is closed before construction begins, there is no “re-qualifying” the borrower. This is a true one-time close; therefore, the borrowers will not need to return to the settlement agent for a second closing once construction is complete.
Home Fixer Repair Escrow Mortgage Program
Finally, we offer a Home Fixer repair escrow program. This option allows for a short term escrow account to be established to complete minor AFTER we close your buyer’s loan. Here are some of the guidelines for the Home Fixer repair escrow program: this option is available for all loans – even investment homes, the maximum amount of the repairs is $5,000. An estimate from a licensed contractor (or other qualified professional) listing all repairs is required and the repairs must be completed within 14 calendar days of closing. This product – very unique to our market – has been wildly successful in getting loans to close, and then having the needed repairs done.
HomeStyle Renovation Loan
A HomeStyle renovation loan combines home purchase or refinance with home improvement financing in one loan with one closing. The HomeStyle renovation mortgage provides a convenient way for borrowers to make renovations, repairs, or improvements totaling up to 50 percent of the as-completed value of the property with a first mortgage, rather than a second mortgage, home equity line of credit, or other, more costly financing method. The funds can be used for any repairs or renovations that are permanently affixed and add value to the property. Eligible borrowers include individual home buyers, investors, nonprofit organizations, and local government agencies.
Fannie Mae does not specify which improvements a borrower may or may not finance. This means that the improvement funds can be used for cosmetic purposes such as landscaping, swimming pools, appliances, and various kinds of remodeling. There is no minimum amount that needs to be spent on repairs. The improvements must be performed by contractors who are licensed, registered, or certified or have the highest level of certification required.
So there you have it. Intercounty Mortgage is proud to offer a variety of construction loans to finance your renovation project. For more information on the renovation loan that fit’s your need, fill out a fast quote form or call us at (800) 498-6141.