Renovation Loans
Unknown Speaker 0:00
You're listening to locally produced programming created in KU NBC Studios on public radio K, u and v. 91.5. You're listening to special programming brought to you by Regatta. kumin. Henry of Coldwell Banker Premier Realty the content of this program does not reflect the views or opinions of 91.5 Jas and more the University of Nevada, Las Vegas or the Board of Regents of the Nevada System of Higher Education.
Regana Kooman Henry 0:42
Welcome to the Southern Nevada real estate Show. I'm your host Regatta. I am a real estate agent and broker associate with Coldwell Banker Premier Realty, I have been a licensed real estate professionals since 1991. Some of my accomplishments are I am a quality service award winner. I have been ranked in the top 10% for all realtors in Southern Nevada by production, and I am a member of the Veterans Association of real estate professionals. I have assisted in all types of real estate transaction over the years, from first time buyers to experienced sellers and also corporate buyers and sellers transferring in and out of Southern Nevada. Today, I have a very special repeat guest on my show Keirsey and Bucky with the loan depot mortgage company. Welcome back to my show. Keirsey
Kiersy 1:35
Hey, we're gonna It's always great to be on the show with you and talk to our listeners about, you know, what their options are and what the real estate market is doing. So I appreciate the opportunity. Thank you.
Regana Kooman Henry 1:47
You're welcome. So let's get started.
Kiersy 1:50
So today, we're gonna I think I want to just switch gears a little bit and talk about some little loan options that the homebuyers have right now in this market. You know, as we all know, right now, it's a tough market, right? Yes, there's rising interest rates, there's inventory shortage. And of course, you know, the price of homes has gone up considerably in the last couple of years. So, yeah. So it can be challenging for buyers to find that perfect home for themselves. Would you not agree with that? Totally. So let's kind of talk about the condition of the home, you know, we'd all love a brand new home, right? But those are, they're limited, you know, the builders can only build so many and, you know, those homes might not the new communities, they might not be in an area that that our buyers want for themselves. And you know, they're generally a little bit more expensive than purchasing a resale home. And oftentimes, they come with HOAs, or multiple HOAs. And some have SIDS and lids. So, you know, when you add those up, that gets to be a little expensive sometimes. So most people buying a resale home have some vision of what they'll do to it once they buy it. Don't you agree with that, of course, it could be you know, new paint, new flooring, maybe, maybe they really liked the house, but they would like an updated kitchen or bathroom. You know, and what generally happens, you know, after they close, it's too expensive. They have to put it on credit cards or take out a second adjustable mortgage to pay for repairs or updates. And you know, sometimes unfortunately, it just never gets done because of those those roadblocks. So what if I told you that we have programs where you can find a home in an area that you like, update the home to exactly how you want to do it? And do it all in one loan with a fixed rate? That'd be awesome, right? Yeah, I
Regana Kooman Henry 3:51
love the fabulous. Yes. So
Kiersy 3:52
we do have options to do this. And we can do it with an FHA loan, we could do it with a VA loan, and we can even do it with a conventional renovation loan. And we can even do refinances that way as well on all three programs.
Regana Kooman Henry 4:07
Wow, that's wonderful. Good information, Keirsey and Keirsey. What are some benefits of doing a renovation loan?
Kiersy 4:16
So if a buyer opts to do a renovation loan, it's it's wise for a few different reasons. First and foremost, it's going to allow the prospective homeowners to transform the home into the into their dream home while financing the purchase price and the renovation costs into one single convenient loan. And this is going to eliminate the need for separate high interest credit cards that they would use for the renovation and you know this, it just really makes it a cost effective, effective option. And then additionally, when you're renovating a property, it can increase its market value, potentially resulting in In a higher return on investment in the long run, and moreover, it provides an opportunity for the buyer to tailor the space to their unique preferences. And this enhances the overall satisfaction and quality of life, you know, for these prospective buyers in their new home, yes, by doing a renovation loan, it can potentially, you know, widen the pool of properties that the buyers have to choose from, it's a great way to possibly pick up a short sale or a foreclosure, you know, we know that when they're doing short sales and foreclosures, that they don't want to do any repairs, you know, if you make offers on those properties, and they're certainly not going to, you know, tailor it to your specific wants or needs. And, or you could just find a complete fixer upper for a good deal. So, you know, if you find that great floor plan you like, but the home is outdated, now you have the option to update the home with the
Regana Kooman Henry 6:00
purchase. Wow.
Kiersy 6:02
So there's really a few different types of options for the renovation loans, you know, within the FHA, VA and conventional, let's, let's kind of briefly go over those. So the first one some people have probably heard about, and that would be an FHA two, okay, 203 k, loan, right for a renovation, the downpayment is still just 3.5%, you could do one to four units, and you just need a credit score of 620. And you can do purchase or refinance on the FHA 203 K. And then within the FHA 203 K, there's two different types that you could do. The first one is going to be called the standard 203 K. And on the standard, there's really no max on the repair amount, except for that it has to stay within the FHA county loan limits, which is right now in Clark County is 494, or 500. And they do update those every year. And we're coming coming around to that time of year again. So that will probably be updated here in the next few months. Some things that you can do on that standard would be you could do a room addition, you could replace all the plumbing, if it was a really old house, and you know, or maybe even a house with high tech plumbing, I think most of those are probably gone. But there's probably still some out there sure. You could do major remodeling, gutting it down to the studs and redoing the whole thing. Let's say that you see a house on the market, you love the house, and it has a pool, but the pool is just in disrepair, there's no water on it, it's peeling, you know, that's going to cost a lot of money, and sellers probably aren't going to want to fix that right? We're gonna, right. So in this one, you could include the costs of that pool repair in the home, and then they could still, you know, take your FHA financing on the property, which might be a deal, a deal killer otherwise, so that that would be a great opportunity for that you can update your landscaping, you can do modernization, I know a lot of the new builds now are putting in smart everything right? Smart, light smart locks, you know, so if you wanted to do that to your home, that's one of the options that you could do under the standard 203 K. Let's say that the property you know, we had a lot of rain in the last couple of months, you know, probably more than we're accustomed to. And I think that people don't notice that they have roof problems until the really gets out rain, right. So if you needed to replace the entire roof, you could do that. Or, you know, if it just needs some repairs in some, some little places, I know a lot of loads that I do, you know, the the roof can be a big deal killer, you know, the sellers not wanting to, to kick in for that. So that could be something that you could finance it. And then you know, we can always do energy conservation improvements. So if you had, you know, 1974 windows, you know, your NV energy, cold air is going right out those right? So if you wanted to update all the windows or you know, appliances and stuff like that to energy conserving, you could do that. So that would be our standard, okay, then FHA also has a 203 K limited, and the difference there is the repair amounts on the limited are up to 35,000 and that the 35,000 includes the fees to do Do the renovation loan and then they need a contingency reserve? Because we all know, whenever you start a project, it's not on the dollar. Right?
Regana Kooman Henry 10:08
Right. Yes, no by experience with my clients on that one,
Kiersy 10:11
yes. So it usually goes over limit. So we do hold out a contingency reserve just in case, you know, that happens. And then if you don't use that contingency reserve, they just put it towards your, your principal, they pay down the principal, okay. So on that limited, you know, you could do a few things you could purchase and install appliances, let's say you got a house, you love the house, but it needs a new stove, it needs a new fridge, dishwasher, those kinds of things, because they're avocado green. And, you know, maybe that's coming back around in color, but my preference is not that avocado green. So, you know, a lot of times when people are purchasing a home and under FHA as well, because it's geared more towards, you know, first time buyers and stuff like that, you know, they're putting every last drop of their savings into being able to purchase the house. So when they get in, they're not going to have an extra couple 1000 $4,000 to, you know, update those appliances, right. So you know, we can include those in in the price and just do it all in one loan. And then you can do some minor remodeling. Weatherization, you can paint the exterior or the interior repair, upgrade the plumbing, doors, window replacement. And then if you had like a deck or patio that was in disrepair, you could do that. Or you could even add a deck or patio if you wanted to. And then again, you can do repair of the roof, you know of the existing roof. Yeah, so those are our two options for the FHA 203 K, then our next one would be just the regular conventional renovation loan. And with that one, you can do 3% down or 5% down, whichever, you know works for your specific buyer. That one only also needs a 620 credit score, we can do purchase or refinance on that one. And then on that one, there's no restrictions for repairs, as long as they're permanent fixtures to the house, right. So our third option would be for your favor and mind the veterans out there that we greatly appreciate their service. There's the two options for that one as well, there's a limited, the minimum amount on that is zero, I don't know why they put a zero minimum out, but they do. And then the maximum out is 35,000. And you can use that for minor remodels and non structural repairs. And then the second would be the VA standard. And the minimum amount on this one is 5000. And there's no Max used for you know, minor remodeling or you can also do large structural repairs for that for that VA.
Regana Kooman Henry 13:21
And, you know, for the listeners out there, they should always choose wisely when making these improvements know what is important, you know, to improve.
Kiersy 13:32
Hey, that is a absolutely great point. We're gonna because you know, I'm sure we're talking about these and people are thinking oh, I'm going to put in some, some some gold fixtures some gold faucets, right but that might not be the wisest choice to do. So regarding it a question for you. What type of home repairs provide the best return when someone is selling their home down the road?
Regana Kooman Henry 14:01
That is an excellent question. Kiersey and I get this question quite a bit when people are looking to make the most of their dollars to do improvements. And what I tell them is curb appeal when the buyer or the potential buyer drives up to the property, you know to have a good presentation, no weeds good curb appeal, front and back yard. They're well manicured doesn't have to be fancy and elaborate but just very clean and to the point and also kitchen is very much a focal point for people. You know, this is where you entertain around the kitchen area when you have company and I would say interior would be kitchen. Primary bathrooms would be something also in the primary bedroom from the primary bedroom that would be something that would be very good Well, well placed for potential buyers also. And those are the focal points.
Kiersy 15:09
Yeah. I mean, that's great regarding because, you know, first impression, right? If you drive up to a house and you see it and your first impression is, you know, the yard is trashy or whatever, that sets the tone for when you go into the house. Correct. Exactly. Yes. So that's, that's some great points regatta and then, you know, I've always heard kitchen sell homes, right? Yeah, people look at the kitchen, they can work around the rest, but people look at the kitchen, because that's where they spend a lot of time self care.
Regana Kooman Henry 15:40
See? What are the renovation risks to consider if there are any?
Kiersy 15:46
Well, you know, there's always risks with everything we do, right, we're gonna so you know, renovation loans, there's going to be some risks, but as long as you, you know, calculate and think about it carefully, then I think you can avoid those, you know, the risks that there are. So I would say the risks number one, you know, only move forward, when you're super confident that the project will either reduce your long term costs, or increase the value of the property. So, you know, like we said, you know, you want, you don't want to be the lowest price home on the market, you don't want to be the highest price home, in your neighborhood in your community, right? Because those are going to be harder to sell or might not get your money out of them. So that's definitely something to consider. And, number two, it's really important that buyers don't invest too much in the remodel, you know, the improvements should, should mop not make the house overly expensive. You know, but you want to be able to, you know, make those improvements that will add value to the house. Yes. And then number three is super, super important. You really, you only want to work with trusted and licensed contractors. You know, I'm pretty sure we've all heard those nightmare stories where they start a job. And, you know, halfway through the project you haven't heard from as crickets right and very scary, you know, you don't want to be living in a house where it's half done and moving around that and you know, you definitely want a contractor that's going to, you know, come to work show up do quality work? And, you know, do it within the allotted timeframe that they have to do it. So, yes. And then the fourth one I would say is, you know, consider your time investment, you know, because most remodels take longer than originally planned, it just is what it is, you know, we could have supply chain issues, you know, the contractor might have subcontractors that are sick, you know, so we always want to give ourselves a little bit, a little bit of time leeway, you know, just make sure that, you know, if it's something that needs repaired before you can move into the house, that you want to set everything up so that you're not scrambling last minute. So those would be you know, the the risks that you would want to take into consideration. And then there's, there's one last scenario that we can use renovation loans for and this is probably not widely known either. But I actually had one of these closed last week. Yes, so the buyers had put an offer on a property and it was a regular FHA loan, and the appraisal came back subject to some repairs. They weren't major, you know, but that it was subject to some repairs, and we couldn't close until those repairs were done. And then secondly, the the appraisal was also just a little bit lower than the purchase price. So, you know, nobody, we don't like to see that. I know, you don't like to sellers don't like to see it. Right, because then you have to go back and negotiate. And in this case, you know, the seller was unable or unwilling to complete the repairs for for whatever reason. And you know, and and they didn't want to drop the sales price, quite frankly. So after negotiations, the seller just wanted to cancel, right. So we've gone through all this work, we're ready to close, you know that stressful for the buyers, the agents, the lenders, the sellers, you know, it's just not a great scenario, but we were able to flip that to a renovation loan, add the repairs to the loan, and still get the seller the price that they wanted. And we we close the deal and we did it on time. Why So that's wonderful, right? And every everybody was happy. I mean, it was a little scrambling at the end, but we got her done. So
Regana Kooman Henry 20:06
Wow, that's great. Good to see ya.
Kiersy 20:09
So, you know, I think it, it really does matter who your lender and realtor are, right? Yes, it does. You want professionals that are knowledgeable, and they work as a team, right? Lenders work with realtors, you know, in the buyers, to, you know, just to ensure that all the options are available to you. Because I'm pretty sure if that was a scenario, maybe with somebody else that the buyers would have had to walk away from that deal. Yeah, which nobody wants that.
Regana Kooman Henry 20:40
That is great information and you know, your stuff, your suit, you're very knowledgeable. Well, thank you, you're very welcome. Keirsey. That is such great information, valuable information that you are sharing with the listeners this morning. The fact that you can finance improvements at the same time you're purchasing the home and to one convenient mortgage payment and the borrower is able to enjoy all their improvements to the home as soon as they move in. That is just simply amazing. Keirsey. And this is great information for homebuyer, you know, and at the end of the show Keirsey Keirsey will be giving out her contact information at the end of the show. For any questions you the listeners this morning may have so that you're able to give her a call. And so let's switch gears for a minute. Let's talk about sellers, we got the buyers covered through these type of renovation loans. Now let's talk about sellers to get their home presented in their best light. If you had the opportunity to listen to my show, last month, I was talking about the real vitalised program that gives sellers the opportunity to make improvements and repairs on the home. And the seller does not have to pay up front for the repairs and improvements until the home is sold. Let's say for example, if if you as a seller are low on funds, and however you want to show the home and top condition in order to get the highest market value. And if you would like more information on the real vitalised program, and to see if your home qualifies for the program. My number is 702-596-1267 that 702-596-1267. And I know there's someone possibly listening right now, that doesn't know if this is a good time to sell. You know, they're there to sell their home right now. And everyone's situation is a bit different. You might be struggling financially, you might be going through a divorce, you might even have a job transfer that kind of came out of nowhere. And you're not sure if you should rent the home or sell the home at this time. All I can say is knowledge is power. And if you would like an appointment to explore all your options, have my number again at 702-596-1267. I will give you all the information you need ask you and you can ask me any questions to make a decision if this is the right time to sell your home. And as I mentioned in my last show, I am here for you, the customer, I am your real estate consultant. And I want to help you to make good decisions regarding all your real estate needs. No matter if it does not turn into a sell of your home or a purchase of a home. I'm dedicated 100% to helping my customers and to help them to make good decisions. Now, selling a home or purchasing a home is a major step in someone's life. And for most people, it will be the most expensive transaction in their life. And I do take that seriously. And I do take my job as your real estate professional seriously. I always want to treat my clients the way that I would want to be treated. You know, because without my clients, I would not be able to have this great career that I have. And I appreciate my clients so much. And you know, with things in life, you know, they some things are like a stepping stone for people in life and buying a home or selling a home would be that type of stepping stone. And now I would like to touch just for a little bit on the September stats for Southern Nevada. You might think what's the importance? Well, again, knowledge is power, the more you know them More you can make of firm and you know informed decision. Now there were 1800 21 single family homes sold in the month of September. There were 552 condos and townhomes sold combined. In the month of September. There were 20 448 new single family homes listed. There were 718 new condos townhomes listed combine, there were 4,006/4 Excuse me 4066 single family homes total excluding offers, and there were 1035 townhome condos total excluding offers. The median sale price of a single family home in September was 450,000. The median sale price of a condo or townhome combined was 270,000. The median listing price of a single family home in September was 480,000. And the median listing price of a condo, townhouse and combined and September was 286,277. The median list price of all single family homes excluding offers was 530,000. The median list price of all condo townhomes combined excluding offers was 288,000. Now 68% of all single family homes went under contract with the buyer in 30 days or less in September, and 72% of all condos and townhomes went under contract in 30 days or less in September. Now, again, you might think, Oh, well, that's a lot to take in. I don't expect you to remember all that. But it does sound like a lot like a lot of homes that are available. But it's really not we do have a housing shortage. So you know, it's like a balanced seller's market right now. It's a it's a seller's market in the fact that there's a shortage, but it's more toward the balance. Also, because interest rates are a little bit higher than they were a bit higher. So lastly, I would like to tell listeners about a new listing I have that is five bedrooms, three bathrooms, three car garage, it's over 2700 square feet, sits at the end of the cul de sac, to fireplaces, separate living family room. Price is 499,900. Now if you'd like more information on this, I'm giving my number at the end of the show. And you can call me about anything that we've talked about anything that's been talked about today. And Keirsey. Please give your name and phone number and your company name for the listeners.
Kiersy 27:53
Yes, thank you. We're gonna so my name is Keirsey and Becky and I am with the loan depot. and my Number. Don't let the area code scare you. I am local. It's 208-589-1181. Again, my number is 208-589-1181. And my NMLS number is 1398336.
Regana Kooman Henry 28:17
Thank you so much Keirsey for being on my show as a repeated guests. You're very knowledgeable. And you do bring a lot of value for the listeners. And I am regatta kumin Henry with Coldwell Banker Premier Realty, your host for the Southern Nevada real estate show that airs every third Sunday of the month at 8:30am. My number is 702-596-1267 that 702-596-1267 And my license number is BS 2780. Thank you so much for listening to my show this morning. And I wish everyone listening a great Sunday and a great week
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