When we think of buying a home, sometimes our wish is to find that old home on the block and put our new spin on it. What financing is available for those of us looking to take on the challenge of a fixer upper? We asked one of our most trusted loan officers, Jamie Trillo of Northpoint Mortgage. She sat down with us and gave us a Q&A session that we just had to share.
What loans are available for a fixer upper?
For homes in need of repairs, we offer renovation home loans also known as “purchase plus improvement loan” to allow you to purchase the home and have the funds necessary to bring your new home up to financeable standards, or allow you to update home to meet your needs/taste.
Could a renovation loan be helpful to me?
Renovation loans can work for anyone! I have helped folks purchase homes that were in complete need of rehabilitation, and I have also helped folks tackle very specific needs using these loan programs. Some common repairs we see are replacement of roof, windows, siding, decking, heating systems and sometimes even updating certain areas of the home such as the kitchen or bathrooms.
How does a renovation loan differ from other financing options?
This allows you to purchase a home that others would deem unable to be financed. When you see “as is” or “cash only” it’s often indicating that the home needs work, will not pass inspections or sellers do not have the funds to repair the home. The renovation allows someone to finance the repairs themselves taking the burden off of the seller.
How does a home renovation loan work? Is it the same process as a conventional loan?
The best way I have been able to describe a renovation loan is like this— it’s an additional loan featured that is added onto the purchase of your home. Fundamentally the process is similar as far as credit and documents needed like a regular loan however the difference is in getting the necessary quotes and signatures for the contractors providing services so we can allocate enough funds for their payment after the work is done.
Do I do the work before I buy the house?
The funds for the repairs are held in escrow until after closing meaning you will close on the home in the condition it is in—you would pay the seller their proceeds and then we would work out disbursements for the contractors doing work. The work can commence after your close on home.
Do I need a HUD certified consultant every time?
I recommend having the consultant come in early and inspect the property. While we may not need their services post closing for further inspections, the service they provide from the onset of the transaction is valuable. These consultants are trained to provide an inspection that will determine the work that has to be included in the repairs for the appraisal to be satisfied.
How does the appraisal work?
Appraiser goes to the property with the quotes from the contractors involved so that the value and condition is evaluated with what it will be once your have completed all repairs/upgrades. The appraisal comes back to us as “subject to” the repairs you are looking to complete. Anything flagged on appraisal must be included in your budget.
Do I need 20% downpayment?
Not at all! We have 100% financing options for folks that qualify though most commonly we see downpayments of between 3% and 3.5% of purchase price depending on what you qualify for!
Can I do the work myself?
There is not DIY permitted on these loans. We need quotes for any work that is to be completed in connection with the loan funds. How I describe it to clients—if there is something you want to do yourself such as flooring or painting of the intereior of the home, do not include it in the loan and this will allow you to do it yourself. We are not looking to mandate the additional work you look to do to the home as long as it was not flagged by the appraiser.
Meet Jamie Trillo!
She is a licensed loan officer in ME, NH and MA. She’s a native Mainer, a Mom to three boys who loves to bake and garden! Jamie has been in the financial industry since 2003. She is often caught saying “no two home loan needs are the same”. She specializes in being able to take a unique perspective to building a tailored loan package and always strategizing well in advance to ensure you close on time! She sprinkles passion and communication every step of the way!