Los Angeles, CA · Member since 2016 · 160 posts · 21 votes
Hello, I just received a call from a 1800remodel.com rep about a government loan program they offer to homeowners like myself in certain areas who are looking to renovate. I purchased my first fourplex in Inglewood CA a month and a half ago and am running into a huge renovation project. I don't think I'll have enough money to renovate everything right now so I figured I would do one unit at a time. I've also considered the idea of taking a loan out. Does anyone know if 1800remodel is legit? Or if there are any other government loan programs available for homeowners looking to renovate? Any advice would be appreciated.
Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
9y
There are various gov't backed renovation financing products out there, from FHA 203k to PACE.
I don't personally know anything about that particular company.
For owner occupied 2-4 unit properties, the two mortgage products that'll handle a project the scope of what you describe would be Fannie Mae HomeStyle and FHA 203k. Fannie Mae actually encourages lenders to re-brand their stuff to create a sense of exclusivity (which confuses the hell out of borrowers), but at the end of the day it's going to come down to one of those two products (regardless of branding), or if it's a pure private sector loan then the interest rate pricing will be atrocious (it must beat a Wall Street index fund PLUS have a risk premium, or the lender/investor would just invest the money in a Wall Street index fund instead of lend it to you).
Los Angeles, CA · Member since 2016 · 160 posts · 21 votes
9y
Since I already purchased the property, I'm assuming that the FHA 203k wouldn't apply to me, right? Since that loan wraps the mortgage and renovation loan all in one? So I'll look into Homestyle. Do you know of any lenders that would do a loan like that? 1800remodel is doing a lot of advertising on TV. I have no idea how they got my number but it seems like a great deal. Around 6% interest rate. I guess properties in Inglewood qualify since they called me. And I think they said I wouldn't have to make a payment for 18 months. I'll find out more tomorrow when I meet with the contractor and get a quote. Seems a little too good to be true so I'm skeptical. What's that catch!?
Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
9y
"The catch" is 6%. When the cost of funds for a bank is near zero. And depositors are paid 1% at best.
If you could borrow money at 1%, you'd be doing your best to find people go borrow it so you could make a spread, no? So allowing a borrower to fix up their own home (fix up your, the borrower, collateral) for 6% seems good to me.
For the right deals I'd loan my cash out at 6%.
Los Angeles, CA · Member since 2016 · 160 posts · 21 votes
9y
@Cody L. So this is a great deal for them. But what about me? haha. I could probably go through another bank and go with the title 1 loan for cheaper right?
But the attractive aspect of this deal would be no payments for up to 18 months. I could have it paid off completely by then. If not, then I'd live with the 6 percent for a while during repayment. Could be a good deal for everyone.
Since I already purchased the property, I'm assuming that the FHA 203k wouldn't apply to me, right? Since that loan wraps the mortgage and renovation loan all in one? So I'll look into Homestyle. Do you know of any lenders that would do a loan like that? 1800remodel is doing a lot of advertising on TV. I have no idea how they got my number but it seems like a great deal. Around 6% interest rate. I guess properties in Inglewood qualify since they called me. And I think they said I wouldn't have to make a payment for 18 months. I'll find out more tomorrow when I meet with the contractor and get a quote. Seems a little too good to be true so I'm skeptical. What's that catch!?
FHA 203k and FNMA HomeStyle are both available as refinances. :) And it sure as heck wont be as high as 6% either way, though perhaps that's where a large TV marketing budget can come from, haha.
Los Angeles, CA · Member since 2016 · 160 posts · 21 votes
9y
@Chris Mason Gotcha! So how long would I need to wait to be eligible to refinance? Doesn't it have to be at least one year? I kind of need to get this place whipped into shape asap, ideally.
Contractor · Los Angeles, CA · Member since 2015 · 4k+ posts · 1k+ votes
9y
Mario Furmanczyk It's just a theory but one of my friend actually tried it. Find a contractor that accepts CCs, charge everything there, then apply for a 0% 18 month balance transfer. lol. I don't trust called calls so I go to their website and ask for credentials like NMLS numbers or whatever then cross check them with a website ending in .gov. OR I'd simply call Chris Mason and have him figure my finance issues out. hehe.
@Chris Mason Gotcha! So how long would I need to wait to be eligible to refinance? Doesn't it have to be at least one year? I kind of need to get this place whipped into shape asap, ideally.
Six months, closing to closing. Reno takes a while, you can get started now and close on it right at the six month mark.
There is some interesting information about it. i would rather go with HERO only because it seems more legit and established through the goverment's PACE program. But from what I see here, there are issues with these loans since there are liens set on your property. Fannie Mae and Freddie Mac don't buy loans that have these liens on them.
But as long as the debt is paid in full, there shouldn't be an issue refinancing correct? I wouldn't be looking to refinance anytime soon. Perhaps a year or so. But I would certainly have this loan paid off within a year or two MAX.