How Can a Renovation Mortgage Loan Work for Me?




What is a Renovation Mortgage Loan?

Think of your dream home. Really think about it. Does it include a modern kitchen? A cozy den with a place to read? Maybe you’re thinking of the perfect home theater for movies or sports, adding a second story or adding a room to your home. Whatever your dream is, how do you achieve it with today’s housing stock?

Traditionally, many home buyers think of buying a fixer upper and putting “sweat equity” into it. This of course means you have to find the time to do the work (goodbye evenings and weekends), ask for help if you aren’t a builder, find the finances to pay for it (credit cards, store credit, slowly gathering cash, hope for a home equity loan) and keep the excitement of your dream alive.

Another option you may not realize even exists is a renovation mortgage. This option allows you to borrow money based on the after-improved value of the home directly in the mortgage. Here’s why this is so great: The finances are amortized into the mortgage so it’s affordable in monthly payments, it’s part of the low interest rate of your mortgage and you get to pay for a professional to do the work correctly and timely.

With interest rates where they’ve been for the last few years, for every $1,000 you roll into your mortgage you’ll only pay about $6 more per month on your house payment. So if you want a $20,000 kitchen upgrade, you can plan for about $120 more per month. Not too bad!

What are my renovation loan options?

Depending on the programs a lender offers, you have a few choices for financing your dream home remodeling goals. Here’s a look at a few popular options: FHA 203k Standard, FHA 203k Limited, Conventional HomeStyle Renovation.

The FHA 203k loans are essentially the same product, with differing requirements or allowable repairs. With this loan, you can borrow up to 96.5% of the appraised value – based on the value when the improvements or repairs are completed – to purchase (or refinance) a home and complete the renovations. Here’s a look at the differences between the Standard and Limited 203k.

• Structural Repairs. Something as big as jacking up your house to replace the sill plate or moving a load-bearing wall would fall under the Standard 203k. So would knocking the house down to rebuild it, as long as you leave the foundation.

• HUD Consultant. The Standard 203k requires a HUD consultant on the loan. This person draws up the paperwork and works with you and your contractors to get a write-up before the appraisal. The Limited 203k does NOT require a HUD consultant (although arming yourself with an experienced consultant is a good idea that can save you money in the long run).

• Cost. The allowable cost of renovations for the Limited 203k is $35,000 MAX. If your repairs and renovations go above $35,000 then you need to get into a Standard 203k loan.
The HomeStyle Renovation mortgage enables a borrower to obtain a purchase transaction mortgage or a limited cash-out refinance mortgage and receive funds to cover the costs of repairs, remodeling, renovations or energy efficient improvements to the property.

There are no required improvements or restrictions on the types of repairs allowed. Repairs or improvement, however, must be permanently affixed to the real property and add value to the property. Conventional HomeStyle loans have requirements for the total loan amount of your mortgage and the amount of repairs that can be done.

When HomeStyle is used for energy-related improvements, borrowers are required to obtain an energy report to identify recommended energy improvements to the property and the estimated cost savings associated with those improvements.

With a 10% down payment you can add your taste & style to a house to make it your home with remodeling projects like a new kitchen, bathroom, room addition or energy efficient upgrades. HomeStyle Renovation allows you to buy a home and fix it up, or refinance and remodel your current home.

As you can see, renovation loans can be a great tool to help you achieve your goal of a dream home. Hopefully you get the chance to roll out the welcome mat and enjoy your home!


For more information contact :

John Insco, Amerifirst Home Mortgage

Branch Manager/MLO

NMLS # 218071  OH LIC#OHLO.028023.002

What to Expect As A Buyer

We love our buyers! Although we’ve had hundreds through the years each experience is unique for each buyer.

Buying a house is exciting, and we certainly hope you will choose us to join in your journey.
You’ve probably been searching online for homes, determining which areabuyer-5s you like, what you can afford, etc. The internet has opened the door to so much information. You can use a virtual tour to feel as though you’ve been in a home before you’ve ever even driven by. You can apply for a mortgage online and get a preapproval pronto from a loan officer you’ve never even spoken with. And you can set up searches so that the hottest properties in an area hit your inbox at the speed of light.

So why do you buyer1need a buyer’s agent, and more specifically, why do you need one from Aero City Realty?

Whether you’ve never bought a home or you’ve bought 50, there is always something to be gained from working with an experienced agent. We’ve witnessed the ins and outs of this business daily for years. We’ve been the buyer or the seller sitting at a closing table and we have ALSO been the agent standing behind many others when they went through the process.

At Aero City Realty we do much more than just turn a doorknob for you and fill out contracts. We can help you find the right loan officer who can save you money AND give you personal real life attention.


      • We can help you decide what things you should ask for from a seller… appliances, title insurance, closing costs, curtains?
      • We can help when it’s late at night and you need to get in to see a property that just hit the market the next day, before someone else grabs the deal.
      • We can refer you to the right resources if your credit is dinged and you need to do some financial housekeeping
      • We’re a listening ear when you feel stressed about moving your family from a home they have been in for years.
      • We can help you negotiate when negotiation just isn’t your thing. We can give you real life advice on what a house is worth now and what pricing trends the areas you are searching are following.
      • We can alert you to a great property that just hit the market.
      • We can take the stress out of the DIY searches so you can live your life outside of prepping for a move.
      • We can ensure your property inspection is something you understand completely and can go over post inspection recommendations with you.
      • We have a personal relationship with other agents and brokers in our area and many times we can tell you about homes that are coming to the market that are not yet advertised.
      • If you want to buy a foreclosed property, we have years of experience working behind the scenes with banks. We have been there while they value and pre-market these homes and can explain the ins and outs of this process to you.
      • We can minimize the time you spend looking at homes by setting up tours of several properties in each outing, even those that are listed with other brokerbuyer-4s or agents.
      • Does the property you are buying need a repair? We have referrals for that.
      • We can be your ally and the agent who represents YOU and only you in the transaction- looking out for your best interests above all else. Click here for an explanation on how agency works.

We can pick your laundry, do your grocery shopping and grab some burgers for you when you’re too busy to cook. OK, just kidding. But that doesn’t matter because you’ll have time to do your normal life activities and STILL house shop with our team on your side.

If you’re ready to start house shopping call us at 513-255-0826. Sign up for a house search account Here.  And start packing because finding the home of your dreams is right around the corner!