Remodeling Loans Allow for the Purchas or Refinance of a Home, Total Remodel and Permanent Mortgage All Wrapped in One, Based on the Future Value.
A Construction Loan Can Be Used to Buy and Remodel a Fixer Upper Whether it’s a Regular Sale or Foreclosed Property, Finance the Remodel and the Carrying Costs During Construction.
Major Remodeling Loans
When a Construction Loan is used to purchase an existing property.
If you are planning on buying an existing home with the intention of conducting a major remodel then a construction loan is the only effective way of doing that. A construction loan will not only provide enough loan to purchase but also enough to money to make the payments during construction and all the work to be done.
The reason for that is the fact that a construction loan is based on the future value of the property, rather than the purchase price. Loan to cost limitations will apply which are outlined in the "construction loans" page.
Loan to cost ratios can be as high as 95% where the "cost" is defined as all the costs associated with:
- Lot/existing property purchase
- Soft cost of construction, such as architectural plans, permits fees etc.
- Hard cost of construction which is all the actual costs associated with the physical work and labor.
- Closing costs, such as loan fees, title fees, real estate taxes, per diem interest and last but not least closing agent fees.
- Interest reserve, which is the reserve account that will make the payments on the construction loan during construction.
- Contingency reserve, which is the reserve account that will pay of the unexpected cost over runs.
Note that unlike a purchase money mortgage loan a construction loan closing expenses are considered as a cost and are inclusive of the loan amount calculation.
When Remodeling an existing home.
The same loan can be used to completely remodel and or add on to an existing home, when the present equity is not enough to complete the project using a home equity line of credit.
Again the loan to value will be based on the future value of the property. However if you have owned the property for over a year then the loan to cost can be as high as 100%.
How Does It Work?
All repair, renovation, rehabilitation and expansion expenses including but not limited to the following list can be included in this remodeling construction loan Program :
- Additions to existing structure.
- Removing / Replacing doors and windows.
- New roof.
- Interior and exterior walls.
- Floor coverings
- New Kitchen and bathrooms.
Even luxury items such as, pool, spa and tennis court are allowed. Basically everything can change down to the foundation.
Loan Amounts And Limits
Loan Limits vary for this program depending on the type of program you choose. Basically the same loan amounts describe in the "construction loans" page apply.
No ready to build yet, but would like to buy the lot? We offer a number of lot loan programs that will help you buy the land to build on at a later date. See details of our land loans here.