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HomeStyle Renovation Loan - Financing
Product Overview
- Combines home purchase or refinance (limited cash out) with home improvement financing in one loan with one closing
- Provides a convenient way for borrowers to make renovations, repairs, or improvements totaling up to 75% of the "as-completed" appraised value of the property with a first mortgage, rather than a second mortgage, HELOC, or other more costly financing method.
- Funds can be used for repairs or renovations that are permanently affixed and add value to the property.
- Primary residences as well as second homes and investment properties are eligible.
- Maximum of 4 financed properties including subject property, on second homes and investment properties. No limit on primary residences.
- NO MOBILE/MANUFACTURED HOMES
BOND/DPA NOT ALLOWED EXCEPT COMMUNITY SECOND DPA UP TO 100% CLTV.
Required LTV's:
Primary Homes:
-1-4 Units
-620 FICO Minimum (660 High Balance)
-97% LTV 1 Unit with standard conforming only and buyer must be a first time home buyer, or a limited cash out refinance (high balance and buyers that are not considered a first time home buyer - 95% max LTV)
-85% LTV 2 Unit
-75% LTV 3-4 Unit
- Minimum 620 Credit score
-2-4 units require 6 months reserves
Second Homes
-1 Unit - 90% LTV
- 620 FICO Minimum
- Minimum 2 months reserves
Investment Properties:
-1 Unit - 85% LTV Purchase Only (75% LTV Limited Cash Out)
- 620 FICO Minimum
- Minimum 6 months reserves
- Minimum $50k loan amount
-2-4 Unit Investment Properties - NOT ALLOWED WITH THIS PRODUCT!
Allowable Repairs or Renovations
- Funds can be used for any repairs or renovations that are permanently affixed and add value to the property.
- Allowable repairs or renovations include, but are not limited to:
- Installation of an “in-ground” swimming pool
- Outdoor living areas are also eligible along with the pool installation
- Subject property cannot be an unfinished model home or unfinished new construction.
- Kitchen appliances (i.e. cooktop/ovens/stove/refrigerator/dishwasher) may be included only as built-in fixtures (attached to property - cannot be removed) in connection with a total kitchen renovation that includes new cabinetry and countertops. Eligibility will be determined by the Renovation Department on a case-by-case basis. Washers and dryers are not included - no exceptions.
- Installation of an “in-ground” swimming pool
-Properties requiring foundation or structural repairs require a foundation or structural report from a licensed engineer. Some examples include but are not limited to additional square footage being added, garage additions with new foundations, cracks or settlement.
Renovation Cost Limits
- The cost of renovations is limited to 75% of the “as-completed value” of the property*.
- No exceptions. This is a Fannie Mae requirement. These limits include the 10% contingency reserve IF FINANCED and all fees/costs listed below in the Fees section. Note: If the cost of renovations exceeds the maximum, the Borrower is NOT allowed to pay the difference at closing from their own funds. However, Contingency funds CAN be paid out of pocket. Any borrower funded contingency that is not used to complete the project will be refunded back to the borrower.
- Projects that include Structural Repairs or Adding Square Footage MUST have a Structural Engineers Report.
- Contingency Reserve
- A contingency reserve equal to 10% (or may be higher depending on scope of work) of the total costs of the repairs and renovation work must be established and funded for all mortgages to cover required unforeseen repairs or deficiencies that are discovered during the renovation.
- 20% contingency reserve required when property needs structural repairs, or where utilities are turned off.
Fees for Renovation loan
- Single Fee: $900
Contractor Validation
- Contractor is selected by the borrower and approved by the lender
- Contractor validation will be completed by the Renovation Department.
- Maximum of three (3) contractors
- General Contractor is preferred but not required
- Follow state and local requirements for licensing of contractor(s). If a general contractor is not licensed for work that requires a license (i.e. plumbing, electrical, HVAC, etc.) obtain:
- proof of the general contractor's liability insurance coverage of at least 2 times the total bid, OR
- the license of the sub-contractor completing the work.
- “Do-It-Yourself” Projects are NOT acceptable even if the Borrower is a licensed contractor.
- Contractor on the project CANNOT be one of the following. (NO EXCEPTIONS):
- Borrower
- Borrower's employer
- Members of Borrower's family
- Seller
- Realtor involved in transaction
- Loan Officer involved in transaction
Draw Information and Process
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Copies of permits must be provided to PrimeLending before any subsequent draws will be disbursed, after initial settlement. Work not requiring a permit may begin after loan funding. |
FEEL FREE TO PM ME WITH ANY QUESTIONS OR ASSISTANCE!
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Lender NY (#NMLS 1084877) and Prime Lending Licensed in All 50 States (#NMLS 13649 )
- 585-204-6923
- http://www.jerryrpadilla.com
- [email protected]