What to expect during the renovation loan process

Renovation loans have become an integral tool in helping sell much of the bank owned inventory currently on the market. From the stolen copper to the lack of upkeep, many homes either require renovation financing or could sell quicker with the suggestion of making a dated house a ‘dream home’. Rehabilitation loans take time. It is important that all agents involved in the transaction understand this. Otherwise, we will all be dealing with phone calls and stress that are totally unavoidable. If a loan officer tells you that they can get a renovation loan done in 30 days they are not experienced in this type of financing. The longest delays come from the contractors involved and are usually something we have no control over.

Here is a typical renovation loan timetable:

  1. House is placed under contract.
  2. I have initial meeting with the buyer to get them ready for the process.
  3. The home inspection and HUD inspection are performed.
  4. The contractors get into the property and put together their price quotes.
  5. Contractor, buyer and HUD inspector (if FHA) negotiate a fair price for the work to be performed.
  6. The contractor provides a contract for the work to be performed along with insurance and references.
  7. The HUD inspector does a final work write-up.
  8. NOW…the appraisal can be done (based upon the work write-up and contract.
  9. The application is taken. The application can not be taken until we know how much the buyer needs!!
  10. Loan submitted, approved and closed.

As you can see there are a few extra steps that are not included in regular mortgage financing. The longest delays come in getting the contractor to the property and getting additional estimates from subcontractors if needed. It is important that the real estate agents try to let these subcontractors and contractors into the house as soon as possible to help avoid delays.

As always, I will push the process along as quickly as possible and have the added luxury of the local HUD inspector sitting two desks away from me. I will also tell you that the Robert Canty, my HUD Inspector, is also a licensed home inspector. He can do both jobs at once, saving your buyer money and saving all of us time!!


MATTHEW PERILLIE
SENIOR LOAN ORlGlNATOR
RENOVATION EXPERT
mperillie@campbellmortgage.com
blog: www.renovationtimes.wordpress.com
phone: 203.937.3343

© 2010 The Renovation Loan Guy.
CT Loan Originator License #70333.

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