Renovation and remodeling loans in Louisville KY
There are many homes on the Louisville home market now that need a little more work than paint and carpet. Often these homes sell to investors as they have the funds needed to freshen and fix the homes. The investor then either rents the house or flips them for a quick profit to someone looking for a house in move-in ready condition. The average prospective homeowner feels lucky to have the funds for the down payment and closing costs. He may have a little extra money to freshen up the paint, but nothing very serious.
In the past, the prospective homeowner would try to get a second mortgage or a home equity line of credit (HELOC) to finance repairs and remodeling costs. Coordinating this with the initial mortgage holder could be a nightmare.
Now, there is a solution and involves getting one loan package with all the repair costs folded into the loan. The two most common are FHA 203k and HomePath Renovation financing.
FHA loans are very popular and they are known as 203b loans. In the Louisville, KY market, we see a high percentage of the homes are sold with the FHA guarantee for the mortgage company. They also have a little known counterpart known as a 203k mortgage; which allows for the renovation costs to be rolled into the loan. They have a version known as the “Streamlined” which is for the more basic renovations under $35,000 and the “Standard” where there is no cost ceiling.
Fannie Mae realized that they needed help in marketing their foreclosures and developed the “HomePath” financing as an incentive. Some of their properties needed more than cosmetic work and they developed the HomePath Renovation mortgage. You will see advertisement in most all of the Fannie Mae foreclosures stating that it is eligible for HomePath financing or if need be, HomePath Renovation. Only Fannie Mae properties are eligible for HomePath financing.
For more details, follow the links below for Renovation Loan Options.