• Making Good Use of Renovation Loans • Last Week in the News Making Good Use of Renovation Loans When showing your clients a home that needs repair, give them some information on our Federal Housing Administration (FHA) 203K renovation loans. These
• Making Good Use of Renovation Loans • Last Week in the News
Making Good Use of Renovation Loans
When showing your clients a home that needs repair, give them some information on our Federal Housing Administration (FHA) 203K renovation loans. These loans are perfect for a bargain hunter who has spotted a fixer-upper or a foreclosure in need of immediate repair, or a client who has found a home that would be ideal if only there were a third bedroom and a second bathroom.
Our renovation loans provide the money to both purchase the home and finance the home’s renovation. With one loan, there is only one application, one set of fees, one closing and one monthly payment. At closing, the house is paid for, and the repair money is put into a trustee account for disbursement as repairs are completed. Improvements can include anything that adds value to the home, such as a room addition, new carpeting, landscaping, plumbing, roofing or a new kitchen. The loan can also be used for energy-efficiency improvements that qualify for tax credits under the new stimulus package.
Another great advantage of a renovation loan is that it provides borrowers a loan based on the increased property value after renovation. But that’s not the only financial upside. The required down payment on a renovation loan can be as low as 3.5 percent. As a tax deductible first mortgage, the renovation loan will usually feature a lower interest rate than a second mortgage and improvement costs can be spread over the term of the loan. The loan can also provide financing for up to six months of mortgage payments if the house is not occupied during construction.
Just knowing about our renovation loans may make the vital difference to motivate buyers to purchase. Give me a call today to learn more about how I can advise your clients on the right loan for their needs!
*Always consult your tax advisor for tax information and advice.
Last Week in the News
The National Association of Home Builders/Wells Fargo housing market index fell two points in July, to 14. Economists had anticipated a reading of 16. It was the lowest reading since April 2009. An index reading below 50 indicates negative sentiment about the housing market.
According to the ICSC-Goldman Sachs index, retail sales rose 1.4 percent for the week ending July 17. On a year-over-year basis, retailers saw sales increase 4.2 percent, the best showing in two months.
The combined construction of new single-family homes and apartments in June fell 5 percent to a seasonally adjusted annual rate of 549,000 units. Applications for new building permits, seen as an indicator of future activity, rose 2.1 percent to an annual rate of 586,000 units.
The Mortgage Bankers Association said its seasonally adjusted composite index of mortgage applications for the week ending July 16 increased 7.6 percent. Refinancing applications rose 8.6 percent. Purchase volume rose 3.4 percent.
Existing home sales fell 5.1 percent in June to a seasonally adjusted annual rate of 5.37 million units from 5.66 million units in May. The inventory of unsold homes on the market increased 2.5 percent to 3.99 million, an 8.9-month supply at the current sales pace, up from an 8.3-month supply in May.
Initial claims for unemployment benefits rose by 37,000 to 464,000 for the week ending July 17. Continuing claims for the week ending July 10 fell by 223,000 to 4.567 million.
The index of leading economic indicators – designed to forecast economic activity in the next three to six months – fell 0.2 percent in June after a revised 0.5 percent gain in May.
Upcoming on the economic calendar are reports on new home sales on July 26, the housing price index on July 27 and gross domestic product on July 30.
∫ Jennifer Coutts is the Loan Officer at Prospect Mortgage located at 4211 Waialae Ave., Ste. 107, in Honolulu. For more information contact her at Jennifer.Coutts@prospectmtg.com or (808) 739-7801.
