Renovation mortgage

I am a mortgage broker. The best renovationand purchase loan is an FHA mortgage. Most condos in the city are not FHA approved condos so this type of loan will not work except for the few approved condos. However if you are buying a 1-4 family home, depending on the price since there are loan limits, the FHA purchase with renovation loan works very well. FHA appraises out the property as to how much it would be worth when the renovation work is done.

If you are buying to flip, then this is a different story, and there are loans for this also.
Feel free to contact me.

Ellen Silverman
E. S. Funding Co. since 1990
Licensed Mortgage Broker, NMLS#60631
esfundingco@aol.com

Ellen points out the difficulties getting a 203k loan for New York City Apartments. I actually applied for one for a house, the standard product. First I had to have the home inspected, then get an estimate from one of the contractors the FHA provided to me. It's a lot of paperwork but if you have all your ducks in a row not too big a deal.

This is a pretty good article spelling it all out.

https://m.huffpost.com/us/entry/10229486

Keith
TBG

Nerve, Most private banks will do it. Check with First Republic. However, the process is a pain as they release the money depending on construction completion. Just slows down everything. Reappraisal in the middle of the project after initial approval - you are asking for trouble but First Republic will do it. The richer you are, the faster the process works. Btw, there is plenty of finished product. Why go through the Reno especially if you have to jump many hoops to fund it?

Thanks Ellen, Keith, 300.

It seems like a doable process for a house purchase. Good to know.

To answer 300 on why go through this, in the area I’ve been looking there isn’t very much finished product of the kind I like at a price that makes sense for me so, with the right numbers, a renovation, even with the amount of work involved, might be a good option. Looking in a different area with more finished product is an option also of course.

Nerve, What is your estimated renovation cost per sq ft including carry (maintenance, taxes, insurance, mortgage interest)? Thanks.

I've had a couple of friends use these mortgages in Jersey buying two and three family homes. Once you get used to the process it's actually quite easy. The Streamline version is a breeze.

Keith

First Republic requires a much higher down payment than FHA, lower DTI and higher fico score than FHA. It's really for higher loan amounts than FHA.

A few examples of FHA:

A single family house with a cost of $700K requires 3.5%down. A seller concession of 6% is allowed.

A four family home that costs $1.2M still only requires 3.5% down. The rental income from 3 units (75% of rental income) can go towards the borrowers income. If the house needs renovation, in this case FHA will allow up to $150K. FHA rates are very low. DTI requirements are 50-55% depending on the lender. Fico score can be below 600.

Today the yield on the ten year note passed the 3% mark (yesterday also) which has been considered psychologically important as it portends higher interest rates.

You can take help from public adjusters. They will claim insurance and will advise you with everything related to mortgage claim. Public adjusters like https://www.alliancepublicadjusters.com are experts and they have full knowledge of the process and they will be on your side and will try their best to get you your claim.