Check out this video with Jason Clifford of SJC Management and John Juge of Goldwater Bank, Lynnwood. They are discussing a fabulous new program called Homestyle Renovation Loan Program.
Jason: Hi I’m Jason Clifford Designated Broker at SJC Management Group and I’m here with John at Goldwater Bank and we’re here to talk about a great program if you’re looking at buying a home that needs some renovation.
Jason: So why don’t you explain the program a little bit for us.
John: You bet. So the program we’re talking about is the Fannie Mae Homestyle product which is a home renovation loan used either for refinancing or for purchasing. And what this product does is, if it’ll, set aside the money to finance the reconstruction or the rehab of the property that you’re buying. So you can look at properties that may need, may need a bit of work, may need a new kitchen, may need a new living room or a full studs down remodel.
Jason: Excellent. So a lot of times these rehab loans, they can be, they can be quite expensive because somebody buys that house. Let’s say they buy it for a hundred thousand and it needs fifty thousand worth of repairs. So they’ll close on the loan, they will pay closing costs on those
loans, they pay some sort of down payment, they’ll get the repairs done they’ll be paying as those repairs are being done and then at the end they have to refinance and accumulate more closing costs. But I understand that this is completely different, it saves a lot of that, those extra costs.
John: That’s correct. The traditional rehab model is where people will do exactly what you said; get the, buy the property, finance the build separately and then have to refinance it all back together and try to recoup their cost that way,
John: and incur double charges. In this product it is, a what is a one and done. So you, your rehab expenses and the acquisition cost for the property are all wrapped into the same loan,
John: and and then, so you only have the one set of expenses, and dumping them. And then on top of that and this is important if you’re going to be, if this is a property you’re going to be living in while your rehab is going on, you have six months of no mortgage payments on the rehab loan so that you can maintain your existing home, home expenses, while you’re fixing up the home you’re going to be living in.
Jason: Wow and what kind of down payment, is that for an investor as opposed to a homeowner. Is there different down payment programs?
John: Yes, so it all follows the type of ownership that you’re going to have; if it’s going to be a property that you’re gonna live in yourself then that’s the minimum down payment, is only 5%. If it’s a second home then it is 10% and if it’s a home that you’re going to use it as a rental, it’s, the minimum down payment is 15%.
Jason: Wow and I understand, so, to clarify, you’re not paying as the work is being done on it, on the loan.
John: That’s correct. It’s a six month interest reserve.
Jason: Wow, that that is huge, that can save a homeowner thousands of dollars and it can allow an investor or homeowner to get into a house that they otherwise would not have the ability to get into and make that home really what they want
Jason: to fit their needs. Well we love speaking with you today, if you’d like more information, please contact us.
Jason: Thank you