{"id":1999,"date":"2019-10-03T21:44:33","date_gmt":"2019-10-03T21:44:33","guid":{"rendered":"http:\/\/realestateagentmagazine.com\/?p=1999"},"modified":"2019-10-03T21:44:33","modified_gmt":"2019-10-03T21:44:33","slug":"renovation-mortage-how-combat-low-inventory-your-market","status":"publish","type":"post","link":"https:\/\/realestateagentmagazine.com\/renovation-mortage-how-combat-low-inventory-your-market","title":{"rendered":"Renovation Mortgage: How to Combat Low Inventory in Your Market"},"content":{"rendered":"

Does this scenario sound familiar to you?\u00a0 You find a client ready to move into their first home or dream home.\u00a0 They come to you in-hand with a pre-approval and you proceed to talk about what type of home they want and need.\u00a0 However, based on your MLS customized search, not much is available.\u00a0 And to make matters worse, the homes that are matching your clients search parameters are selling quickly and facing multiple offers (which may have increased the final winning sale price).\u00a0 So, you spend countless hours logging some serious windshield time showing more homes.\u00a0 The buyer seems to \u201clike\u201d<\/em> the homes you\u2019ve visited, but also point out things that they don\u2019t like.\u00a0 Ultimately, the negatives outweigh the positives and you\u2019re back to square one and the showings continue.<\/p>\n

So how do you break this never-ending loop?\u00a0 Interest rates are low, buyers want to take advantage of the low rates, BUT there is a problem; there\u2019s another housing shortage in your market.\u00a0 How do you combat this housing shortage issue?<\/p>\n

One way to turn a housing shortage negative into a positive, educate yourself on renovation mortgage loans.\u00a0 Align with a reputable mortgage lender who\u2019s certified in renovation lending AND has a proven process that protects the customer after the home loan closes.<\/p>\n

Renovation Mortgage<\/h2>\n

How does a Renovation Mortgage combat the housing shortage problem?<\/p>\n

Have you heard the phrase, \u201cWork Smarter Not Harder\u201d<\/em>?\u00a0 Most likely you have.\u00a0 With a renovation loan, you can turn a like<\/em> into a love<\/em>!\u00a0 The customer can literally turn that outdated kitchen into the dream kitchen they\u2019ve seen in magazines.\u00a0\u00a0 They can update bathrooms, turn a one-stall detached garage into a two-stall attached garage, finish a basement, or even add a 2nd<\/sup> level to the home for added living space.\u00a0 With a renovation loan the realtor can cut down on the amount of homes they show a customer, and help the customer improve their equity situation (since the final loan to value is based on future appraised value with the completed renovations).<\/p>\n

Let\u2019s look at the different types of renovation loans <\/strong><\/p>\n

Fannie Mae Homestyle<\/em>, FHA<\/em> 203(K) Full<\/em>, and FHA<\/em> 203(K) Limited<\/em> are the 3 most common types of renovations. See At-A-Glance. Some companies offer a specialized VA renovation product.<\/p>\n

\"Stearns<\/p>\n

Do the Pros Outweigh the Cons?<\/strong><\/h2>\n

Renovation loans can take longer to close, and are more complex on the surface, but they don\u2019t have to be if you and your lending partner know what you\u2019re doing.\u00a0 Typically, a renovation loan can take up to 45 days to close.\u00a0 That extra 15 days is necessary because the homebuyer must select a licensed contractor to do the renovations.\u00a0 Then the contractor must submit a detailed bid sheet to the lenders renovation coordinator for approval. \u00a0The timing to receive this bid can be tricky, but since the lender must rely on this document to calculate the Total Acquisition Cost<\/em> and Loan Amount<\/em>, it must be finalized before they can even order the appraisal.\u00a0 This process protects the homeowner because a true renovation loan is a single-close<\/em> loan.\u00a0 That means the borrower closes on the mortgage, then the total renovation costs get put into escrow and paid out to the contractor in draws after work milestones have been completed.<\/p>\n

*One thing to note is the homebuyer cannot do the renovation themselves.\u00a0 A licensed contractor must go through a vetting process (which maybe different between every lender).<\/p>\n

In closing, a renovation loan isn\u2019t for everyone.\u00a0 However, it\u2019s the type of loan that can open more doors for the new homeowner.\u00a0 The quality & condition of the home could even be considered distressed; and a renovation mortgage could turn that lump of coal into a beautiful diamond (aka dream home).\u00a0 So next time you\u2019re looking at homes for a buyer, ask yourself if a renovation loan is right for this buyer.\u00a0 You could save them thousands of dollars and be a real hero!<\/p>\n","protected":false},"excerpt":{"rendered":"

Does this scenario sound familiar to you?\u00a0 You find a client ready to move into their first home or dream home.\u00a0 They come to you in-hand with a pre-approval and you proceed to talk about what type of home they want and need.\u00a0 However, based on your MLS customized search, not much is available.\u00a0 And […]<\/p>\n","protected":false},"author":34,"featured_media":2006,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22,15,5],"tags":[],"class_list":["post-1999","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate-trend","category-spotlight","category-twin-cities"],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/realestateagentmagazine.com\/wp-json\/wp\/v2\/posts\/1999","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/realestateagentmagazine.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/realestateagentmagazine.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/realestateagentmagazine.com\/wp-json\/wp\/v2\/users\/34"}],"replies":[{"embeddable":true,"href":"https:\/\/realestateagentmagazine.com\/wp-json\/wp\/v2\/comments?post=1999"}],"version-history":[{"count":0,"href":"https:\/\/realestateagentmagazine.com\/wp-json\/wp\/v2\/posts\/1999\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/realestateagentmagazine.com\/wp-json\/wp\/v2\/media\/2006"}],"wp:attachment":[{"href":"https:\/\/realestateagentmagazine.com\/wp-json\/wp\/v2\/media?parent=1999"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/realestateagentmagazine.com\/wp-json\/wp\/v2\/categories?post=1999"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/realestateagentmagazine.com\/wp-json\/wp\/v2\/tags?post=1999"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}