Financing a Montgomery Fixer-Upper
We have many wonderful old neighborhoods in Montgomery AL, but like many cities some of our older homes have seen better days.
You have found THE house in THE neighborhood, but you can hardly call it your dream home because of the work it needs. How will you ever pay for all the repairs? The good news is there are financing options for properties in need of repair.
Section 203(k)
FHA's Section 203(k) mortgage combines the cost of renovation and the purchase of the house within one loan.
These mortgages can be used on homes in urban areas, as long as they're at least a year old and the planned renovation work totals at least $5,000.
First, you hire a HUD-approved consultant, who identifies the rehabilitation projects that are most urgent and the projects that enhance the value of the house. Next, the lender hires an appraiser to determine the post-renovation value of the house, which is used to determine the amount of money you can borrow. The portion of the loan earmarked for improvements is disbursed in installments as the work is completed.
HomeStyle Renovation
Fannie Mae also offers a mortgage product that allows borrowers to finance the cost of a house and renovation work within one loan. While Fannie Mae's HomeStyle Re-modeler is similar to the Section 203(k) program, it differs in a couple of key ways.
For starters, the mortgage limits are somewhat higher. For most of the United States, loans for single-family houses can go up to $323,000. With a HomeStyle Re-modeler loan, that amount would include both the cost of the house itself and the work that's done.
Fannie Mae doesn't require the use of a consultant. However, the borrower has to find a licensed contractor, who submits detailed work plans and specifications to the lender. Fannie Mae doesn't specify the types of repairs allowed, but the work has to be on structures that are permanently attached to the property.
Private Lenders
Many local banks will offer financing programs that allow the purchase of a home along with renovation costs.
Are you looking to buy an older Montgomery home? We can help you find that home and help you find the financing to go along with it. Call The Hat Team at 834-1500 or 800-428-5239. We'll make your dream a reality!
