Maryland Remodeling Loans
requests have been received regarding the need of homeowners and buyers to have
a better way to finance improvements on their existing home or the home they are
purchasing. In the past, homeowners or purchasers wishing to finance
improvements only had a few alternatives. These were 1) Pay for improvements in
cash or with credit cards. 2) Do a cash-out refinance based on the current value
of the home. 3) Take out an equity line or 125% LTV loan, which are both based
on the current value of the home and carry above market rates. 4) Get loan
approval based on the value of the property after improvements are made. This
still places the burden of funding the improvements on the homeowner who will
not be reimbursed until after the loan closes.
am a mortgage broker and represent 16 of the largest construction lenders in the
market. As a broker, I work for my client and not the lender, taking the time to
understand your situation and placing your loan with the lender whose programs
most closely matches your situation and needs. I am able to give you unbiased
advice and support throughout the process. Construction and renovation lending
is a specialized part of mortgage banking and most lenders or brokers do not
have the experience to guide you through this complex process. I have attempted
to give you some basic information in this paper but please do not hesitate to
call to discuss your individual project. At the most fundamental level,
construction lenders offer two types of product characterized by how they base
interest rates during the construction phase. I will refer to these approaches
as “One Step” and “Two Step”
Maryland remodeling loans are a variation of the "One Time Close" construction/perm product. The major advantage of a Maryland remodeling loan is that we lend against the finished or "as completed" value of the property rather than the current value of your home as most other lenders do. With other programs, you are out of luck if you do not have enough equity to complete the project.
The loans have two uses:
If you are purchasing a property that would be perfect if it had....... The first disbursement acquires the property and subsequent disbursements occur at predetermined points in the construction process. After construction, the loan modifies into the permanent loan of choice saving the cost of a second closing.
If you are remodeling an existing property because it would be perfect if it had.... The first disbursement refinances any liens against the property and advances the contractor any up front costs. Subsequent disbursements and modification follow the above process.
100% Remodeling Fixed Rate. 100% LTV Buyer must contribute 3% to the transaction but the 3% for closing costs can come from a gift, sale of assets, or grant. Maximum loan $300,700 and you must occupy the property. Requires "perfect" credit with a FICO score of 700. Call or email for details including some geographic and income restrictions.
One Time Close Maryland Remodeling Loan. Available to purchase a home and make improvements or remodel your existing principal or vacation home. You can borrow up to 90% of the "as completed value" of your principal residence or 80% of your vacation home. Interest only payments during construction are based on Prime Rate +1% and the loan will modify to any permanent loan.
Construction Second Trust. Designed for the borrower with a favorable first trust rate. The loan allows you to borrow the difference between your existing mortgage and 100% of the "as completed" value of your project. During the construction period interest only payments based on disbursed funds are based on the Prime Rate +2% and after construction, your payments are fully amortizing at the note rate.
Under the above programs, you may act as your own General Contractor if the remodeling costs are less than $50,000 and the "footprint" of the home is not changed. If your project is large or will change the foundation we will require a fixed price contract with a licensed contractor.
I have included a list of the documentation needed to process your Remodeling Loan , a section on Frequently Asked Questions, a section on remodeling loan draw schedules, and information on remodeling loan fees. Remodeling loans may require the use of a contractor. I have a section on contractor requirements and contracts.
NEW! A newsletter giving a detailed description of remodeling programs available by email.
Remodeling loans are complex. I have attempted to give you basic information, but it is almost impossible to answer all questions here. Please call or send me an email with the specifics of your situation.
We offer the ability to qualify and close your loan into several unique programs for borrowers with non traditional income or asset situations. Please visit my No Docs page.
One final but important note. Remodeling loans are complex and are a specialized area of mortgage lending. I have many years of experience in remodeling loans and in most years will close in excess of $3,000,000 of these loans. As an experienced mortgage broker, I have access to most remodeling loan programs available today and will research the market for the remodeling loan program which makes the most sense for you. I prefer to analyze your goals and financial situation before I recommend a loan program but I will always make sure you clearly understand the options available to you. I stay with my clients from the beginning to the end of the project. If there is an issue with the lender, I will intercede on your behalf. I work for you, not the lender.
I hope this information was useful to you. Please scroll down to view my Mortgage Market Guide. A weekly publication explaining the financial markets from a consumer's perspective that is available by email. I have nearly 8,000 subscribers and would be happy to have you as well. Your email address will never be used for any other purpose.
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