Renovation Loan Program
Before looking in the market for a lender for your home’s renovation, you must know few things about your home. First of all, you should know how much money you need for repairs. Secondly, you must know whether the value of your home will increase in future after the renovation. Suppose you are confident about the increment in the value of your house more than the renovation cost. In that case, it will be suitable for you to acquire a renovation loan.
There are some essential steps that you must look for before acquiring a renovation loan. This is important to prevent any problem in the loan application process. There is a risk of defaulting on a renovation loan program if you have less money invested in your house. In addition, the borrower must spend on a home renovation that is justified with the area. It means that you should incur expenses in a way that your home price does not exceed the cost of houses in your area. It would help if you did not make haste in getting a renovation loan. Find several lenders to know about the current interest rates and cost. Moreover, make sure that renovation and remodelling might get time-consuming and more expensive than you expect.
Basics of Renovation loan program
There are two types of renovation loan programs. One is a limited 203(k) loan, and the other is a standard 203(k) loan. Both of these loans work in the same way, and they have the same eligibility criteria. However, some features make a difference between them. Some of these differences include the following:
- Limited 203(k) has a repair maximum of $35,000, while standard 203(k) loan has no repair price limit.
- The home must be habitable in Limited 203(k). but in the case of standard 203(k), the house can be unhabitable during the renovation
- No structural changes are allowed in Limited 203(k); however, structural changes are permitted in standard 203(k).
These are the renovation loan program that United Mortgage Plus offers:
Borrowers come for the renovation loan program when their home needs repairs. Many different options are available for home renovation, such as 203 Limited 203K (Streamline), Standard 203K (Full), USDA, and jumbo renovation. Borrowers need to pay the high cost and go through the complex process when acquiring the loan. But following the renovation loan program does not follow those processes and can be secured easily. The 203K loan helps both the lender and the borrowers settle the terms, including the loan repayment period and interest rates that can be fixed or adjustable. Borrowers who do not need significant finance go for the Limited 203k. However, borrowers who are looking for refinancing or buying the property go for the HUD.
Limited 203K (Streamline)
The lender requires the contractor’s estimate with the total cost of material and labour costs along with the contract of the sale. Please request an appraiser familiar with the 203k loan product and reiterate that the appraisal is “subject to” repairs per the contractor’s estimate. A borrower must attach a contractors estimate with the appraisal.
Standard 203K (Full)
If you do NOT have a HUD Consultant’s report, STOP NOW- you should not order an appraisal at this time. Please get in touch with us to order a HUD Consultant report. Once a HUD Consultant’s Report is ordered and completed, then one can order the appraisal. Please request an appraiser familiar with the 203k loan product and reiterate that the appraisal is “subject to” repairs as per the HUD Consultant Report. A borrower must also attach a HUD Consultant Report with the appraisal.