New Hampshire Real Estate Blog

There are some awesome buys out there! But what happens if you don’t have the money to make the necessary repairs? You’ve found your dream home…a diamond in the rough, at a great price but you don’t have the extra money needed?

I asked long time mortgage officer Steve Blier those very same questions and when he started to answer me I said how about writing a post for the New Hampshire Real Estate Blog instead? Rather than just educate me, I thought why not share it with all of you. Especially since so many of you are interested in buying NH bank owned (REO) properties.

So without further adieu…

“REHAB.” CONSTRUCTION LOANS for PURCHASE or REFI. (OWNER OCCUPIED) “101” by Steve Blier Sr. Mortgage Loan Officer GMACM

It’s nice to know in today’s ever changing world of the Mortgage Financing, where not only are the various banks changing, tightening up, or even dropping many consumer mortgage programs, that there’s still a program that will provide a buyer with the necessary cash to make the required or desired improvements on a property.

The best way to help explain this REHAB/CONSTRUCTION Program is to give you an example of how it works, then I can explain the way it works.

Purchase Sales Price is $200,000

The house needs a new roof, a new boiler, the previous home owners moved out in the middle of the winter, not notifying their lender. The oil runs out & water plumbing pipes freeze. This Property is 30 years old, and never had any updates, so a new bath and a half and new kitchen are badly needed.

The Total of all Required Repairs and Upgrades with a General Contractors estimate to take care of the above items is as follows:

New Roof $8,000, New Boiler and Repair/Replace misc. plumbing $12,000

Remodel 1.5 Baths and New Kitchen $25,500

10% reserves for costs over-runs/upgrades/changes $4,500

The total REHAB FUNDS Requested is $50,000

This Amount is then added to the Sale Price of $200,000, for a Combined Acquisition Cost of $250,000

The Buyer is required to put at least 10 % down = $25,000 and would need to finance a min. of 90% LTV (Loan To Value) for the “AS IF” Completed Value, with these Repairs & Upgrades imagined to have already been done.

The Buyer/Borrower can either choose to do a First Mortgage @ $225,000 and have a small (tax deductible PMI monthly payment of approx $100. per month until such time they have 20% min. equity, or they may opt. to do a First Mortgage @ 80% LTV @ $200,000 and do a small second of $25,000 (at a slightly higher rate…with no prepayment penalty) and have NO monthly PMI.

Now for all of this to work…and I must say it works Great for the Right Buyer and Property…..the Appraisal needs to come in for at least the $250,000

The Buyer will close on the property for the $200, 000 sale price, the buyer has the construction contract to repair & rehab the home…GMAC MORTGAGE will Disburse up to 4-5 checks, one for each completed job task & inspection of the completed work preformed.

The Buyer is able improve the condition of home that they other wise might not have been able to afford, and are able to do it with only 10% of the total overall cost of the home. In this case they get double that amount back from the bank for the wonderful home improvements!!

Finally a Mortgage Program that seems to have the Buyers “Interest” in mind! Plus this Program ALSO works on REFINANCES…..for any further information or question about REHAB or other ”With The Buyer’s Interest in Mind” Programs…Please call me @ 603-930-5684….or my e-mail address Steven.Blier@gmacm.com Web Site www.gmacm.net/steven.blier

Helping you make that Diamond in the Rough a Home that you can truly be proud of……Best Always, Steve Blier GMAC MORTGAGE

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