Tag Archive for: custom home loans

June 22, 2022
mortgage blog, home remodel, renovation, preferred rate

These top 5 strategies can help you stay on budget, plan ahead, get the best financing and save money on your next home remodel. Home remodels and renovations come in all shapes and sizes. Blowout kitchens, bonus rooms, a new home office, or giving your bathroom a luxury upgrade. Thousands of homeowners across the country are refinancing their mortgages to take advantage of their home equity before mortgage rates push higher. So if you’re thinking about refinancing to start a home remodeling project or renovation, you’re in good company.

The costs of a home remodel vary by location and higher interest rates translate to higher mortgage rates. It’s smart to connect with a local mortgage advisor early on! You’ll be able to access your home equity at the lowest rate available, and stay on budget for your next home remodel project.

Keep these strategies in mind to stay on budget and tackle that renovation you’ve been dreaming about.

Related: 7 Ways to Increase the Value of Your Home on Your Next Remodel

TOP 5 HOME REMODEL STRATEGIES TO STAY ON BUDGET

1. Keep the scope of the project in check.

The number one reason most home remodels run over budget might be surprising. It happens when homeowners change their minds. Turns out that changing the scope of the project is the number one reason most home remodels slide beyond the budget.

Changing your mind on kitchen cabinets or tile flooring, for instance, after supplies have been ordered. Or deciding on structural changes once new framing has begun.

In almost every case, the work has started, materials have been ordered, or supplies have been delivered, and the cost is already measured. As much as possible, take your time and picture your home renovation from start to finish. Ask your builders and designers as many questions as you can before the work begins.

Often there’s a lot of work on the back end that the homeowner may not see, which becomes a surprise when they change their mind.

Related: How to Finance a Renovation with the Fannie Mae Homestyle Loan

2. Expect new fees for building permits and current building codes.

Many home remodels look straightforward and clear-cut at the start. However, once the work begins it’s very common for new obstacles to show up and new work will be required to bring the home up to code. Why? Building codes often change over time, so there are typically new codes and permits that have been put in place after the home was first built.

Each state has its own rules to follow, but most states and counties require contractors to meet current building codes if they discover a conflict. Across most states in the country, if a contractor discovers something that isn’t up to code, they are required to do the work to bring it up to code.

Any and all costs associated with bringing the house up to code will be passed along to the homeowner. So, make room for these unexpected changes, especially if you have an older home or if you are doing a major home remodel.

3. Plan for structural repairs and hidden damage.

Floorboards, roofing, foundations and framing are all home to pests and critters. Often the damage is hidden until construction begins and then the damage is exposed. Many older homes have structural damage caused by termites, wood rot, mold, or water damage. 

It might seem impossible to prepare for unexpected costs like replacing the subfloor or foundation. However, it’s worth taking the extra step to have a professional home inspection done before you begin the work. Talk with your contractor about the age of your home. Also, find out if they’ve done work on other homes in your neighborhood. This can reduce a lot of stress and keep the home remodel project moving forward.

4. Increase your budget for weekend getaways and eating out.

A home remodeling project that includes the kitchen usually means there will be days when you won’t have power, gas, water, or working appliances. What’s more, kitchen remodels often run much longer than expected, and homeowners often find themselves eating out more than they first planned. Camping in the backyard or eating on hotplates can sound novel, but the reality wears off quickly.

Even home remodels outside the kitchen often get homeowners wanting some peace and quiet. People get tired of the dust, construction, noise, and general chaos. What might be one night out turns into back-to-back restaurants and doordash. With larger projects, some families find themselves moving out temporarily to take a break from it all. Plan ahead so you can reduce stress and budget for the cost.

Also, don’t forget your pets! You may need temporary boarding or plan to take them with you on a short getaway.

 

Compare: Should I use a Home Equity Loan or HELOC for a home remodel?

 

5. Set aside extra funds to update your Homeowner’s Insurance.

Home remodels often increase the value of your home, so it’s a good idea to revisit your homeowner’s insurance coverage. For one, you want to make sure the renovations are covered under your policy and that your coverage meets your home’s new value. Certain home remodels and renovation projects such as adding square footage, a new office, or a full-scale kitchen remodel will increase the value of your home. It just takes a quick call to your service provider to make sure you have the coverage you need.

 

What’s the best way to pay for a home remodeling project?

Many homeowners consider a home equity loan or a home equity line of credit for a home remodeling project. Others refinance a mortgage or turn to personal loans and credit cards.

The truth is, there are several custom home loan options that can save you money even as mortgage rates continue to rise. A preferred home loan that gives you access to your equity can help you stay on budget and finance your home remodel without added financial stress.

It’s always worth it to connect with a local mortgage advisor to discuss your options–especially when it comes to a home remodel or renovation project.

 

Taking Action

Connect with a mortgage advisor to determine the best path to refinance for a home remodel or renovation project. Remember, you can access your home equity in several different ways — cash-out refinancing, a home equity loan, a home equity line of credit, or custom home renovation loans. We can help you decide the best option that will save you money and fit your home remodeling budget. Connect with a local mortgage advisor to get started. We’d love to help.

September 28, 2021
blog man home improvement

So you’ve spent the better part of the past two years at home, and you’re finally ready to give your home a makeover. Maybe it’s a quick facelift or a backyard garden. But for a lot of homeowners, now is the final push before the holidays to take on bigger home remodeling projects like kitchen and bathroom upgrades, new flooring, or even a full-scale home renovation.

The costs of a home remodel vary dramatically by location, but mortgage rates are still low. This means you can access your home equity at a low rate and stay on budget for your dream home remodeling project.

First, beware of these hidden costs so you can plan ahead.

Related: 7 Ways to Increase the Value of Your Home on Your Next Remodel

TOP 5 HIDDEN COSTS OF A HOME REMODELING PROJECT

1. Changing the Scope of the Project

Believe it or not, the biggest hidden cost to a home remodel is when the homeowner changes their mind. More than half of all remodeling projects face a “change in scope” which dramatically increases the cost. Changing your mind on kitchen cabinets or tile flooring, for instance, after supplies have been ordered. Or deciding on structural changes once new framing has begun.

In almost every case, the work has started, materials have been ordered, or supplies have been delivered, and the cost is already measured. As much as possible, try to envision a home remodeling project from start to finish and ask questions before the work begins. Often there’s a lot of work on the back end that the homeowner may not see, which becomes a surprise when they change their mind.

Related: How to Finance a Renovation with the Fannie Mae Homestyle Loan

2. Building Codes and Permits

Many home remodels look clear-cut on the front end. But once the work begins, it turns out that new work has to be completed to bring the home up to code. Why? Building codes often change over time, so there are typically new codes and permits since the home was first built. Across most states in the country, if a contractor discovers something that isn’t up to code, they are required to do the work to bring it up to code.

Even if the new work wasn’t quoted in the home remodeling project, the contractor is required to meet current building codes, and that cost will be passed on to the homeowner. Allow a larger budget to meet these unsuspected changes, especially if your home was built several years ago.

3. Eating Out and Moving Out

During a kitchen remodel, eating out can become a growing expense and one that is rarely planned for. A home remodeling project in the kitchen usually means you won’t have power, gas lines, or working appliances. Some homeowners set up a temporary kitchen in the basement or garage, but the novelty can wear off quickly.

Even home remodels outside the kitchen often push homeowners out. People get tired of the dust, construction, noise, and general chaos. What might be one night out turns into ongoing restaurants and takeout. With larger projects, some families find themselves moving out temporarily to take a break from it all. Plan ahead so you can reduce stress and budget for the cost.

Also, don’t forget your pets! You may need temporary boarding or plan to take them with you.

Compare: Should I use a Home Equity Loan or HELOC for a home remodel?

4. Surprises and Structural Changes

Many hidden costs are hiding in the floorboards. Literally. Pests, termites, wood rot, mold, water damage. Many homes have hidden structural damage that is only discovered once a home remodeling project is underway. While there’s isn’t a tried and true way to plan ahead for these changes, it’s smart to prepare for the possibility. Have finances prepared so that you can face the problem head-on if any structural damage or surprises come up. This will reduce stress and keep the home remodeling project moving forward.

5. Homeowner’s Insurance

Home remodels often increase the value of your home, so it’s a good idea to revisit your homeowner’s insurance coverage. For one, you want to make sure the renovations are covered under your policy and that your coverage meets your home’s new value. Certain remodeling projects such as adding square footage, a new office, or a full-scale kitchen remodel will increase the value of your home. It just takes a quick call to your service provider to make sure you have the coverage you need.

Why is home remodeling so expensive right now?

Millions of people are spending more time at home than ever before: online school, remote work, DIY projects, home gardens, you name it. As a result, home remodeling and renovations have skyrocketed and the demand for contractors has jumped up in tandem. But even though construction costs are inching upwards, it’s still smart to tap into your home equity and get the job done while mortgage rates are low.

What’s the best way to pay for a home remodeling project?

Many homeowners consider a home equity loan or a home equity line of credit for a home remodeling project. Others refinance a mortgage or turn to personal loans and credit cards.

The truth is, mortgage rates are still low and there are several custom home loan options that can save you money. A preferred home loan that gives you access to your equity can help you stay on budget and finance your home remodel without financial stress.

It’s always worth it to connect with a local mortgage advisor to discuss your options–especially when it comes to a home remodeling project or renovation.

Taking Action

Connect with a mortgage advisor to determine the best path to finance a home remodeling project. Remember, you can access your home equity in several different ways — cash-out refinancing, a home equity loan, a home equity line of credit, or custom home renovation loans. We can help you decide the best option that will save you money and fit your home remodeling budget. Connect with a local mortgage advisor to get started. We’d love to help.

April 22, 2021
blog young couple on couch

Each time you refinance your mortgage or purchase a new home, closing costs will be an inevitable part of the transaction. Depending on the amount, this can be an unwelcome surprise to new homeowners. The good news is that you have options. A great mortgage advisor can help explain the benefits and drawbacks unique to your situation. Even better, you can secure a custom home loan that covers your closing fees and meet your financial goals sooner.

The truth is, you get to decide how your home loan is structured. There are some tradeoffs to consider: You can choose to pay more points upfront and lower your interest rate, or you can increase your down payment for better long-term rates. You can also roll your closing costs into your mortgage or pay the costs out of pocket.

What are My Options When it Comes to Closing Costs?

With so many variables, it makes sense to look at a few alternatives:

  • Pay closing costs out of pocket
  • Roll closing costs into your loan
  • Negotiate with the seller to cover partial fees
  • Agree to have the lender cover closing costs in exchange for a slightly higher rate

Mortgage interest rates are still low enough that it’s worth considering.

The bottom line is that every new mortgage and refinance will have closing costs, but you have a few options about how you decide to pay them.

What Do Closing Costs Include and How Much Will I Have to Pay?

Closing costs are one-time fees and expenses a homeowner pays when you close on a new home purchase or refinance your mortgage. It’s the final chunk of money required after you’ve covered your down payment.

Closing costs run anywhere from 2-5% of the home loan amount and typically include title insurance, appraisal fees, property taxes, loan origination fees, and more.

It’s common for the buyer and seller to negotiate some of these costs in the final purchase contract. Often the buyer will pay most of the closing costs, and the seller will cover some of them, but this isn’t always the case.

In some situations, the buyer will pay the full amount, especially if the property is in high demand with multiple offers.

If you’d like a detailed behind-the-scenes look at closing costs, go here to check out the breakdown of loan-related fees and mortgage insurance costs that your mortgage could include.

What Happens When a Lender Covers the Closing Costs?

With a no-closing-cost mortgage, this typically means that your lender will cover most or all of your closing costs upfront. For the lender, this is a profitable alternative since the closing costs are a set amount. By charging a slightly higher mortgage interest rate in exchange, the lender will have a higher return over the life of the loan.

Depending on your situation, this might be a great choice to consider as a new homeowner facing closing costs. Less out-of-pocket expenses mean you might be able to become a homeowner sooner. As a homeowner, you’ll be able to start building equity right away, take advantage of tax breaks, and have the option to refinance in the future.

What Happens When I Roll Closing Costs into my Mortgage?

Folding the closing costs of your mortgage into your new home loan is different than having the lender cover the closing costs. When you roll your closing costs into your mortgage, it doesn’t necessarily raise your interest rate. Instead, the amount of your home loan increases by the value of your closing costs.

For example, if your purchase price is $350,000 and you put a down payment of $35,000 (10%), your starting mortgage would be $315,000. If the closing costs for your new mortgage are $10,500 (3%), your lender can roll it into your mortgage so that your home loan would be $325,100.

Rolling your closing costs into your mortgage might change your monthly payment by only a nominal amount, making it an attractive option for new homeowners short on cash. Just remember that you’ll be paying off that $10,500 with interest over the life of the loan, which in some cases might be 30 years.

What Happens If I Can’t Afford the Closing Costs?

Adding the closing costs to the home loan might cause the loan amount to jump beyond the approved loan amount in certain circumstances. In other situations, a borrower might not have the funds to cover closing costs for various reasons and might qualify for a government grant.

Borrowers with low-to-moderate income can apply for grants to help with closing costs through HUD-approved housing agencies. If you think you might qualify, give us a call. We can connect you with some information that might help.

Final Takeaway

Every home purchase and refinance will incur closing costs. If you don’t want to pay out of pocket, schedule a time to talk with your mortgage advisor about possible options:

  • no-closing-cost mortgages
  • lender credits or rebates
  • lender-paid closing costs
  • zero-cost or no-cost mortgages

What’s Next

Working with an expert mortgage advisor makes all the difference when it comes to managing your closing costs on a new home purchase or refinancing your mortgage. If you’d like to understand more about your options, give us a call. We can help.

March 23, 2021
PR blog home pottery 2

Shopping for the best mortgage lender will save you money and a lot of stress. It seems like every big bank and mortgage lender promises the lowest rate and fastest close. So how can you really tell who to trust when it comes to finding the best mortgage lender? Mortgages aren’t one-size-fits-all anymore. Taking time to learn and find the best mortgage lender can save you money and ultimately secure a better mortgage. The good news is it doesn’t need to be overwhelming.

This quick article can help.

When It’s Time to Find a New Mortgage Lender

Here are some common situations when it might be time to reconsider your options and shop for a new mortgage lender:

  • Getting ready to buy your next home
  • Considering a second home or rental property
  • Shopping for a vacation home
  • Refinancing your mortgage
  • Relocating to a new area

If you’re a homeowner in any of these situations, it’s worth it to do some comparison shopping this time around.

3 Smart Tips to Finding the Best Mortgage Lender

1. Loyalty is Overrated in the Mortgage Business

If you have a mortgage lender you really trust and who has helped you through a few mortgages or a refinance, keep it up!

But a lot of homeowners make a few common mistakes when they buy a house for the first time:

  • Using a big bank just because they have other accounts there
  • Following a friend’s referral without doing any research
  • Using a lender the realtor suggests (to keep things moving fast)
  • Choosing an online lender to take advantage of super-low advertised rates

Sometimes it’s a good fit. But more than 45% of homeowners usually end up using a different lender at some point. Why? A home mortgage is still one of the biggest financial commitments most people make in their lifetime. Doing a little homework to choose the right lender can save you a lot of money.

2. Find a Mortgage Lender Who Does Custom Home Loans

This might seem obvious. But mortgages are not one-size-fits-all and finding the lowest rate online won’t always get you the best mortgage.

Loan programs are becoming more and more specialized to meet the growing needs of homeowners and a housing market that changes quickly.

Consider just a few costly variables that go beyond the advertised “low mortgage rate” you might see from lenders:

  • Fees
  • Points
  • Closing costs
  • Adjustable terms
  • Variable terms
  • APR vs. Interest rates
  • Balloon payments
  • Private mortgage insurance
  • Prepayment penalties

These are just a few of the variables that could end up costing you a lot of money in the long-term. Every mortgage has fine print and there are a lot of hidden costs to consider.

The bottom line: Work with someone who listens to your situation. A qualified mortgage lender will show you custom home loan options to meet your financial goals.

3. Find the Best Mortgage Lender By Doing a Test Drive

Take advantage of your network and start with referrals. Check-in with a trusted realtor, a few business colleagues, or friends you might have in the industry.

Once you have a few referrals, do a little research by taking a test drive.

Read customer reviews, get in touch and ask a few questions.

Do the potential lenders:

  • Respond quickly?
  • Answer your questions with relevant info?
  • Work quickly without making you feel pressured?
  • Explain the process so you know what to expect?
  • Have a LOT of happy customers?

Loan programs are becoming more and more specialized.

There are so many options that it’s easy to feel overwhelmed. Find a mortgage lender who communicates clearly and makes things easier for you.

Final Takeaway

You want to work with an experienced mortgage lender who can narrow down the options and offer you custom mortgage solutions. A lender who can help you reach your own financial goals.

The first time you bought a home, you may have spent most of your time going to open houses and comparing properties. Maybe you picked a lender too fast.

This time around, you’ve got some extra time and a lot more knowledge.

Taking Action

Shop around, read customer reviews, connect with a few lenders and find one who listens well and is committed to helping you with your financial goals. Take a test drive and learn about smart next steps. Take time to find the best mortgage lender and you’ll save money on your mortgage. We can help.