Streamlined renovation loan Dana

| Dana's New Space on 12th Place | By Dana Zalowski

I found myself in love with 12th Place, but I couldn’t bask in it long. I had to quickly switch gears to focus on hashing out my financing and budget under my Streamlined Renovation Loan.  This is a conventional product that allows you to finance renovations by essentially rolling the construction costs into your mortgage. My go-to industry partners: Eric Boutcher with Atlantic Coast Mortgage and Fredy Miranda of Miranda JSC Renovations were on stand by.


Budgeting For Repairs


Eric, aka my lender, was my first stop. I gave Eric an approximate desired sales price and down payment amount in order to determine rough itemized costs, the construction money budget, and my estimated monthly payment. The numbers looked good with $80k in construction money at the sales price I had verbally agreed to with the seller. Now it was time to walk through the property with my contractor Fredy to develop the scope of work and cost. My fingers were crossed that it would magically come in at $79,999, but of course my “must have” list melded with my “nice to have” list came in just over $85k.  This wasn’t the end of the world as I was prepared to contribute some out of pocket cash if needed. I was happy with the numbers from both Eric and Fredy so I moved forward with a written offer.


Damages to the porch that I included as part of my repairs budget.

We also budgeted for repairing the water damage in the bedroom.

The Home Inspection


We quickly ratified; and it was time for the home inspection. I had a pretty good idea of the condition of the property, but the inspection was more detailed than my walk through with Fredy. It uncovered one big ticket item that I was not prepared to deal with; the roof needed to be replaced. After the inspection I brought in a roofer to more thoroughly evaluate the roof. It turned out that not only did the main roof need to be replaced, both the front porch roof and rear porch roof also needed to be replaced, and the slate mansard needed repair. This surprise upped my construction cost by another $15k! I was no longer as comfortable with my out of pocket construction contribution. I negotiated a $7,500 credit from the seller, but I was still not 100%.


Roof Damage

The home inspection revealed that the roof was damaged and needed to be replaced.


The Appraisal


Cut to Eric. While I was meeting with the inspector and roofer, Eric had locked in my financing and ordered an appraisal. This appraisal is twofold; the property has to appraise 1) in the current condition for the sales price, AND 2) in the renovated condition for the sales price plus construction money. Finding out the appraised values was a make or break moment. The appraisal came back above value on both reports! It gets even better. Given my planned improvements, the future appraised value came in $60k over. Eric had now found a solution to my budget crisis. Thanks to the high appraised value I could increase my construction money to $100k (The max construction money allowance is 15% of the future value).


With all my ducks in a row I patiently approached closing. It was truly the calm before the storm. This type of loan requires that all planned renovations be complete within 90 days of closing so once the house was officially mine I knew we’d hit the ground running. I was nervous, but excited to start making changes and to start seeing a home.


If you want to find out if this loan is right for you check out our blog post here. Eric outlines the specific qualifications and requirements on the borrower, loan and property for this streamlined renovation loan!


For more behind the scenes photos of the progress of the #NewSpaceOn12thPlace, click here!

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