New Freddie Mac mortgage plan bundles purchases and repairs.
Freddie Mac unveiled a new financing option this week that will allow consumers to purchase a home and finance renovations all with one loan.
The CHOICERenovation mortgage is meant to address the “need for more efficient ways to finance home improvements to solve for today’s aging housing stock,” according to the agency. So, buyers who use the program will get to borrow the amount needed to actually purchase the property, plus the cash to complete renovations.
Homeowners can use the program to fund remodeling projects that cost up to 75 percent of a property’s appraised value.
Freddie Mac believes this approach should save consumers both time and money. For example, rather than taking out a mortgage and then a separate home equity loan — a strategy that will come with two sets of closing costs and fees — homeowners can now just pay a single time to borrow the money they need.
Danny Gardner
“The CHOICERenovation solution gives borrowers the opportunity to make improvements, renovations and upgrades to a home using a purchase or no cash-out refinance loan that will be eligible for sale to Freddie Mac,” agency senior vice-president Danny Gardner further explained in a statement. “This provides the borrower with a convenient cost saving option for financing renovations.”
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