Facing aging housing stock and tight markets, more consumers are looking to renovate a new purchase or their existing house to create he home of their dreams.
Making significant home improvements such as adding an extra room or replacing the roof not only makes a difference in how much you enjoy your home, but it can improve its overall value as well.
The top 3 interior renovation projects with the best likely value to the home for resale is:
- Complete Kitchen Renovation
- Kitchen Upgrade
- Bathroom Renovation
According to a study from NAR, 75% of homeowners have a greater desire to be in their home after remodeling. In 2019, 73% of homeowners say they plan to make home renovations.
If you aren’t happy with some aging features of your house, or want to buy a home that needs work, you should consider using a home renovation loan to transform a house into the home of your dreams.
What are the Benefits of a Renovation Loan?
The main benefit of renovation loans is that they give you the ability to buy a home in need of repairs and finance those repairs as part of the mortgage. They also have low down payment requirements and great rates.
How does a Renovation Loan Work?
Let’s say you want to buy a home that needs a brand-new bathroom and kitchen. A Renovation lender (like Greenway Mortgage) would then give you the money to buy (or refinance) the house plus the money to do the necessary renovations to the kitchen and bathroom.
Often the loan will also include:
1) A contingency reserve so that you will have the funds to complete the remodel in the event it ends up costing more than the estimates suggested and/or 2) a provision that gives you up to about six months of mortgage payments so you can live elsewhere while you’re remodeling, but still pay the mortgage payments on the new home.
Ready to Take the Next Step?
We’re here to make the renovation home loan process a whole lot easier, with tools and expertise that will help guide you along the way, starting with a FREE Renovation Loan Quote. We’ll help you clearly see differences between loan programs, allowing you to choose the right one for you. Ready to get started? Reach out today.
Please enjoy this quick update on what happened this week in the housing and financial markets.
- The Fed meets next week for the last FOMC meeting of the year. A policy rate cut is not expected, but markets will be looking for signs of what may happen in 2020.
- Trade talks with China continue on a 'phase one' deal. A trade deal is expected to boost the global economy, and a deal announcement could pressure mortgage rates higher.
- The trade deficit dropped to its lowest level in nearly 1-1/2 yrs in October, suggesting trade could contribute to economic growth and higher rates in the 4th quarter.
- Federal regulators expressed cautious optimism on the use of alternative credit models to expand access to credit and enable consumers to obtain more favorable rates and terms.
- CoreLogic reports that October house prices were up 3.5% year-over-year. Prices increased month-over-month by 0.5%.
- NAR forecasts the possibility of record low housing inventory in 2020. A shortage could lead to higher prices and make it even more challenging for buyers to find a home.
On November 26, 2019 the Federal Housing Finance Agency (FHFA) announced an increase in the maximum conforming loan limits for mortgages acquired by Fannie Mae and Freddie Mac in 2020.
The maximum loan limit for one-unit properties will be $510,400, an increase from $484,350 in 2019. Release.
The decision was based on the recovery of housing prices under the Housing and Economic Recovery Act of 2008 (HERA). They require that the baseline conforming loan limit be adjusted each year for Fannie Mae and Freddie Mac to reflect the change in the average U.S. home price.
FHFA third quarter 2019 House Price Index (HPI) reported that house prices increased 5.38%, on average, between the third quarters of 2018 and 2019. The baseline maximum conforming loan limit in 2020 will increase by the same percentage.
For areas in which 115 percent of the local median home value exceeds the baseline conforming loan limit, the maximum loan limit will be higher than the baseline loan limit.
A list of the 2020 maximum conforming loan limits for all counties and county-equivalent areas in the country can be found here.
Contact your Greenway Mortgage loan officer today for more details about how the increase can impact you.
Overwhelm - It's a real thing and Erin the Expert (ETE) wants to help get you the info you need to start the homebuying process!
When someone is thinking about buying or selling a home, they want to be well-informed. They want to make the right decision for themselves and their family. They scour the internet for any information they can find about the housing market.
Today, there is an abundance of information available. It is often conflicting news. It can easily lead to confusion and concern, perhaps even causing a potential buyer or seller to cancel their plans to move altogether. Instead, the best things to do are sit down and take a deep breath.
In a recent article, Jeff Davidson, a recognized speaker on the subject of productivity, explained:
“The pace at which new information arrives will accelerate every day…Too often, the reflex to take action only exacerbates your time-pressure problems. Do not bite off more than you can chew, and acknowledge that often, the wisest response to too much competition for your time and attention is to simply slow down to assess the best way to proceed.”
To that point, here is an easy five-step process to follow if all of this information seems overwhelming:
- Calm Down – Don’t let the confusion lead to concern or panic.
- Slow Down – As Davidson suggests, just “slow down to assess.”
- Think – Remember the reasons you wanted to move in the first place. Are they still important?
- Plan – Determine whether or not the new information should change anything. If you need further clarification on some points, reach out to Erin for a better understanding for a better understanding.
- Act – After thorough consideration, feel good about your decision, whether you decide to move or not.
It's always been a good idea to get pre-approved for your mortgage loan. In fact, it should be step #1.
Why should I be pre-approved for a mortgage loan?
In recent years, mortgage guidelines have been tightened. Documentation requirements have been expanded and followed more closely. A pre-approval gets you through the process and uncovers potential pitfalls long before you become obligated by a contract to purchase.
What advantages will I have once pre-approved?
You'll be certain about the price range that's best for you. You'll know how much cash you'll need to close, and you'll know your maximum monthly payment. Understanding your limits will help you negotiate with confidence. Plus, since sellers like a sure thing, you'll have an advantage over buyers who may not have been through the process.
How long is the pre-approval valid?
Your pre-approval is typically good for the "shelf life" of the documents used. These will include a credit report, pay stubs, bank statements, W2s, tax returns, etc. The usable life of these documents will vary, yet it's usually safe to say that your approval is good for up to three or four months. (Check with your Loan Officer). During this time, it pays to file all important financial documents so they're readily available for future updates.
What if I change my mind?
That's perfectly fine. There's no obligation to purchase a home or use a particular loan program once you've been pre-approved. In fact, pre-approval simply helps to assure you know exactly what's involved, that you are comfortable in a particular price range and that you are truly ready to make your move.
The process of purchasing a home is easier when you have financing in place before you make an offer. We're here to help get you started, and it's never too early to do exactly that. Give us a call when you’re ready. 908-489-4658.
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