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This is THE Best Home Renovation Loan Program - HomeStyle Loan Explained - YouTube
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OK, so you finished bench
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watching whatever home renovation
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projects show shows up on HTV nowadays.
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And now you're feeling extremely inspired
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and ready to take on a home
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renovation project in.
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Maybe you just want to buy
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the ugliest house on the block
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and turn it into this piece of crap
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into this beautiful mansion.
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But there is one problem.
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You don't have enough money.
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Or maybe you do have the money,
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but you don't want to spend it
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on home renovations.
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No problem, I got you.
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OK, so today I'm going to be talking to
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you guys about the Fannie
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Mae homestyle renovation program.
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And this can be a great
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option for anybody
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who's thinking about buying a home
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that needs some rhino, some rehab.
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Or maybe you already
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own a property yourself,
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whether it's your primary home,
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your vacation home,
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or even an investment property,
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anyone am a significant improvements
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to it?
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Honestly, guys, there are a lot of stuff
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that you can get accomplished
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through this renovation program.
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For instance, you can, like,
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literally do a bunch of stuff
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like you can renovate a bathroom.
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You can renovate a kitchen,
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you can tear down a kitchen
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and make a new one.
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If you wanted to, you can.
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Turn down walls.
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You can finish a basement.
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You can build them.
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Can you build a basement?
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I don't know.
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Actually, I don't even know
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if you can build a basement,
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but if you can, you
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could definitely do it.
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You can build an inground pool,
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you can do landscaping.
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You can plant trees.
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You can build an Adu
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or one of those old houses.
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One of those guest houses guys.
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I mean, the opportunities
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are pretty much almost endless.
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So as long as whatever improvements
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that you do in the property are.
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You know, affixed to the property.
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OK, you can just pick him up
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and take him away, but Needless to say,
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you can do a lot of stuff
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with a renovation loan with this
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Fannie Mae homestyle
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renovation program and guys.
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By the way, this is basically
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a conventional loan.
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Alright, so you kinda
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gotta think about it
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the same way as you would do
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with their conventional mortgage.
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You know,
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you basically qualified the same way.
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I mean, you know, as
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far as your credit scores,
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your down payment, your
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you know your income
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and all that kind of stuff.
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If you're buying a house,
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and if you're refinancing,
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it's pretty much obviously the same way
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except about the appraisal value.
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Now you can take advantage
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with this loan for pretty much
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any sort of residential real estate,
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so you can do a single family home
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that has multiple units on it,
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or just a one single family home are.
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You can do it on a condominium.
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You can do it on townhomes as well.
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The only thing that
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you can take advantage on
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would be on a manufactured home,
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but pretty much anything else place
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you could do this in your primary home
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or you can do it on a vacation
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or even an investment property,
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so that gives you a lot of good options
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if you want to improve
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those other properties as well.
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Alright, so how does
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this whole process work?
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Well, guys listen.
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It's actually really simple.
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If you're buying a home,
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the lender is going to consider
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the ASK completed value
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and that's pretty much the purchase
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price of the property
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plus the amount of repairs or whatever
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we person you want to do
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and that will be your
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as completed values for instance.
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So you're buying a $200,000 home
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that needs a lot of work
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and you're going to put in about
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$100,000 worth of rehab into it.
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That's going to give you as completed
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value of $300,000 now.
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It's a conventional loan
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in the minimum down payment
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on a conventional loan.
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Assuming that you're
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going to buy this home.
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I mean, living in is 3%.
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You can do it a 3% down or 5% down.
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So in this example 3%
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of $300,000 is $9000.
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So actually just
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think about how crazy that is
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that you're basically taking
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just a $9000 down payment
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and you're leveraging that
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so that you can get
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not just the purchase price of the home,
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but the amount of the renovation.
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So with $9000 you getting $300,000 on
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just one single property,
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which is insane, right?
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Now, one of the really cool
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things that you want
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to look into with this,
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and like honestly to me,
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one of the biggest opportunities
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within is the fact that obviously,
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once you do all these renovations,
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the property might
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actually appraise much more.
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You know, say that your ask
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completed value is 300,
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but the property has
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actually now worth 350.
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Then you have literally essentially built
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$50,000 worth of equity in the property.
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That's pretty crazy, isn't it?
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On a refinance, it works pretty
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much the same way. Obviously.
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Now you live in the property,
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there's no binding.
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But now the lender
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is going to be looking at the
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after repair value
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or what they call the a RV
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and say that for instance, right now
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your home is worth $200,000, right?
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And you're going to do the same thing.
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You're going
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to put in $100,000 worth of work.
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So now your value
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is, or your as completed
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value is 300,000,
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but the appraiser goes to the property.
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Does the appraisal looks at all
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the other homes in the area
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that have you know that they have sold
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in the last 12 months or 24 months?
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And based on the fact
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that now your home is going to be,
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you know much more desirable, it's
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going to have all these new
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improvements and things
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now the value might be more,
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might be 350, right?
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And
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now the lender is going
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to take your loan to value
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based on that 350,000 in.
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Now if your new loan balance falls
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under or at 80% loan to value
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then you don't have to pay the
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mortgage insurance anymore.
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You don't have to have
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any PMI, which is crazy.
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Now if that doesn't happen,
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it's no big deal.
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You can have alone too.
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Value up to 95% of
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the value of the property sold.
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The loan amount can be all the way
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up to 95% of the value of the home fully.
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That makes sense.
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I know it's a little bit too technical,
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but don't worry about it too much.
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Alright, just know that
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you have a lot of room to go.
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You can do so many things you know
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with this kind of loan program.
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So how much loan can you actually get?
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Again, this is a conventional loan,
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so in most areas
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the maximum loan amount
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for a conventional mortgage
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is 500 and 48,250.
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Or a single family home,
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so just one unit.
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Obviously that among goes
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up if you you know
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have a duplex or triplex or quad
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now in high cost areas like you know,
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California, DC, Washington
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Stein, New York.
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Then obviously that known amount goes up
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at believers about 100 and 22,000.
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That's the that's the high limit.
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Conventional loan amount.
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So now I'm not saying that
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you can buy a $50,000 property
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and you know you can
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put $400,000 worth of work.
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In fact, Fannie Mae actually limit
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the amount of the repairs
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to being no more than 75% of the
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as completed value
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or the after repair value.
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So for instance,
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if you're buying a $50,000 home
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and you put in $300,000
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worth of work into it,
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then that would exceed the ask completer
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or the after repair value.
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Alright, so that's something
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you want to look into,
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but however that doesn't
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mean that you couldn't buy $300,000 home
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and put $140,000.
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So work into it.
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You can definitely do something like that
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or do it like a $200,000 home
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and put $250,000
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worth of work into it as well.
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Understand about this program guys
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that you should definitely know about
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is finding a good general contractor.
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OK, the work has to be done
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by a general contractor
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and not by yourself.
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You can't touch the property,
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you can just get your buddies
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or people off the street
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or your friends or family
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to come and help out whatsoever.
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OK, everything has to be done
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through a general contractor
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in kind of the way
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it's going to work guys is.
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The lender is going to be sending
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your general contractor
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forms for him to sign
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and completing all that stuff
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you want to get a really
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detailed work agreement.
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You know basically the stuff
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that you want to do
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an A good work right up,
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which is going to breakdown
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the cost of the materials
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and the cost of the labor.
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That's going to be
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going up to the lender.
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Now the lender is going to be
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taking care of a lot of stuff.
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I mean, they're going to take care
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of feasibility studies.
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They're going to
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be taking care of permits
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and things of that nature
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along with your general contractor,
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but the key guys.
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Is for you to find a really good
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general contractor that is fast.
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That sort of kind of knows
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how this program works and
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is very responsive because a lot of times
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what I see is that general contractors
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can actually hold up the lender,
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which obviously will hold up
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you closing on your loan
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fast and efficiently.
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Now guys, a final thought.
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I feel like most
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people should look into
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something like this
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because you know
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with the market appreciating the way
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it has over the last 12 or 16 months
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with home values going up so quickly
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and there are just so many buyers.
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Out there very few houses for sale.
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If you're able to find
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a good opportunity of a property
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that is not in the best of shape,
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but it's in a really good neighborhood
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in a really good area and you can,
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you know now you can leverage this long
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with this knowledge that I'm giving you
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and you can do whatever
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you want with the house
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you know in still be able
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to build equity into the property
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just by you taking a couple of more steps
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that most people just wouldn't know
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or wouldn't even do
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then that's going to be playing
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to your benefit.
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Along way, specially with the fact that
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I mean you are going to be
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increasing your net worth
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by doing this you know.
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And it's not like you're
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going to be doing the work
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you're going to get
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somebody who's going
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to do it for you guys.
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It took me along
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time to create this video
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and I have no idea why.
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I think today was one of those days
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when I'm like I can even talk.
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So if you like the video,
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make sure you give it
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a like subscribe to the channel.
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Let me know your thoughts.
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Put him right down
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in the comment box below.
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If you have any questions
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and I know there are more stuff
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that I didn't say in this video
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because it's kind of complicated.
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Not really complicated,
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just boring mortgage stuff,
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but if you want to look more into it,
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just look at the description box below.
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Because I'm going to be putting a lot
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more information into ways
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such as like loan
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to values and debt ratios
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and what kind of documents you need
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in how to get started
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and all that kind of stuff.
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It'll be in the description box.
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But guys, thank you
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for watching all the way through the end.
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Let me know what you think about in an
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I will see you in the next one.
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Take care for now.
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