This Renovation loan program is designed for individuals who wish to make renovations/additions to their current home. The loan is a combination refinance and renovation loan. At the initial closing any existing liens are paid off and the balance of the loan proceeds are disbursed in draws as the improvements are completed. The LTV is determined by using the "As Completed" appraised value of the property. During this renovation phase, you will be making interest only payments on the amount disbursed. Once the improvements are completed, a modification agreement will be exercised and you begin making your PITI payments based on your permanent mortgage financing terms.
Product Description and Guidelines
The "Prime Rate" based renovation loans charge you interest only payments while improvements are being made, based on funds disbursed, at an interest rate equal to the "Prime Rate" as published in the Wall Street Journal plus 1%. This is described as the renovation or construction interest rate. This rate is subject to change on a daily basis and is the rate used to calculate, on a daily moving basis, the interest payable on a monthly basis. Since the interest rate is subject to change on a daily basis, there is no ability to lock in the remodeling interest rate. However, you must choose your permanent mortgage program prior to submission of your loan for underwriting, so your loan may be underwritten to the parameters of that particular program. As early as the initial application or any day afterwards, you may lock in the interest rate of any available permanent product. The length of the lock period must be long enough to complete the improvements prior to lock expiration. For lock periods longer than 60 days, you may incur additional costs. The remodeling loan is not assumable. The maximum LTV is 95% for your principal residence and 90% on a vacation home. Property limitations are owner/occupied primary residences and vacation homes only. Financing for multi family property is available if you occupy one unit but the LTV is limited to 75% for 2 unit properties and 70% maximum for 3-4 unit properties. Approved condominiums are acceptable but renovations are restricted to the inside of the unit. Loans are made to individuals only. Loans to partnerships, corporations, estates, or irrevocable trusts are not permitted. No construction financing for investment properties exists at this time.
I have included a list of the documentation needed to process your renovation Loan , a section on Frequently Asked Questions and common misconceptions, a section on construction loan draw schedules, and information on construction loan fees .
NEW! A newsletter giving a detailed description of Renovation programs available by email.
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.