There are a fair number of people who are interested in renovation loans.
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Hello, LOs!
A friend of mine is leaving Brooklyn for upstate New York. He and his wife found a big house in Columbia County, which eventually could be perfect for their growing family, but needs a gut renovation. I told him about the FHA 203K program and Fannie Mae's Homestyle program.
After looking into them, the couple decided to get a mortgage and pay for the extensive renovations with cash received from the sale of their Brooklyn co-op. Rates on a Homestyle loan would likely be in the high 6s or low 7s, a construction plan would need to be approved, a contractor ready to go and able to meet tight timelines. With all the supply chain instability and the relatively high cost of borrowing, he decided financing it wasn't worth it.
Still, there are a fair number of people who are interested in renovation loans. Most of the demand right now is coming from existing homeowners who are looking to fund repairs and have enough to make upgrades, but don't have the money to buy a new house, LOs told me.
Those who are looking to buy using a 203K or Homestyle loan are generally losing out to buyers with cash, though I've heard a few success stories.
LOs, are you seeing an uptick in demand for reno loans? What are the pros and cons in this difficult market? Share your experiences by emailing me at james@hwmedia.com.
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