Minnesota Contractor Helps Clients Remodel Home With No Out Of Pocket Costs

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Tony Greczyna of Pineview Builders in Roseville got a call one day from a Minneapolis couple about remodeling their kitchen along with some updated mechanicals and hardwood flooring. 

After he talked to them on the phone he agreed to meet with them and inspect the property to put together a bid for the work.  When he asked how they’d be paying for the project they informed him that Jay Dacey, with Metropolitan Financial Mortgage Co. had them pre-approved for the project.

Rather surprised, Tony called Mr Dacey that same day to get more information on how they’d get the financing because the homeowner’s informed him they had only recently purchased the property and assumed there would not be a large equity position.

Mr Dacey explained to Tony that in 1978, under the National Housing Act, HUD made available a very unique home improvement loan program that is not well known but is starting to become more popular as many homeowners are either buying properties in need of work or already in a home that needs some type of renovation.

Surprisingly, qualifying for the loan is no more stringent than an FHA mortgage.  Homeowners need only a 640 credit score and reasonable debt to income ratios to credit qualify and they do not need 20% equity or anything like that either. 

In fact, the bank will give the homeowner credit for the work to be completed when determining the loan size so future appreciation is credited before construction starts.

What’s best for contractor’s Dacey noted is the funding is gauranteed for them because the money is held in escrow by the mortgage company. 

As 2010 is just around the corner more and more contractors are expected to be utilizing this as a tool for both new remodeling projects and to also get back in touch with past bids that never moved forward as a result of the home owners’ ability to finance them.  

Homeowner’s and contractors alike are encouage to give Jay Dacey a call at 651.210.9593 and see if they qualify for this program and are encouraged to do so immediately as the low fixed rates currently available are expected to rise in the first half of 2010.

How do i find a fixer upper and finance the improvements on a home in Minnesota?

If you have a down payment and the desire to stay in a home for a few years, there are huge opportunities right now to purchase your first home.  The Obama tax credit is making it even easier to get into a fixer upper.

So, if you have patience, now is the perfect time to purchase a home.

The question for anyone brave enough to buy is – Can you ever really be confident you’re getting a bargain?

Most homes priced right are selling near full price but some are overpriced and are selling for a 10% discount from list.  A good agent, like Jesse Grumdahl at ReMax, will show you what properties are priced well and which ones are under/over priced.

Here are five tips for getting a good deal:

1.  Look at older inventory that was mispriced.  An over-priced home will scare away many buyers. Remember, you make your money when you buy, not when you sell.  Be careful to not buy a “unique” home that doesn’t have a desirable flow/layout/lot.  A great deal on a property that people don’t want, does not a good investment make!

2.  Look for a “fixer upper”.  And more importantly, have a contractor go through an give you a firm estimate on the improvements needed to bring it up to speed.  It’s better to buy a home with “good bones” that just needs a little “lipstick” than a money pit with foundation, mechanical/electrical/plumbing issues.  Would you rather pay a painter 15 bucks an hour or a plumber 115 bucks an hour?

3.  Look for a home with at least 2 or 3 price reductions.  The more reductions, the more pain the seller is in and the less likely they are to expect top dollar.  FOR SELLERS:  RE-READ THIS AND LISTEN TO A SELLING AGENT WHO SETS THE PRICE A LITTLE LOWER THAN THE REST !  THIS STRATEGY WILL MAKE YOU MORE MONEY THAN OVERPRICING AND REDUCING.

4.  Look for a desperate flipper.  These people will often times be over extended on lines of credit and will often own the home free and clear, having paid cash to get the best deal.

5.  Skip “updated” homes.  Too many people have too much emotion tied up in their “baby” and expect to get a high return.  However, go back to number 3/4 and if it was over-priced from the start by a flipper and multiple reductions have taken place, then you may be on to a winner.

Do you have questions on these items?  Additional tips?  Give me a call at 651.210.9593 or an email to jaydacey@gmail.com and let me know your feelings on this post.

How does a FHA 203k Refinance work on my home in Minnesota?

The FHA 203k Refinance is a product that allows home owner’s to finance about $30,000 in home improvements.  (The loan size limit of the repair portion is 35,000  but we need to pad this number with a 10% contingency fee as well as permits, inspections, bank fees and other misc items).

The loan proceeds can be used for most interior improvements that are NOT structural in nature.  In other words, new flooring, appliances and paint are OK but additions are foundation/wall alterations are NOT ok.

Interestingly, home buyers can also utilize this product as a purchase money loan.  The primary funds used to purchase the property will be paid out at closing to the seller and the remaining will be put into escrow to be utilized for the improvements.

In ALL cases, there are 2 draws.  The first draw is the lesser of 50% of job costs or 100% of materials.  The final draw will be for the balance.  This is a safe way for local builders to fund improvements and not tie up their lines of credit and also not have any risk of no-pay because the money is set aside in escrow.

This FHA 203k product will be gaining more and more traction as home buyers and new home owner’s purchasing foreclosures and short sales in Minnesota need money to fix up the properties.

If you are interested in either refinancing your home or purchasing a home utilizinge the FHA 203k Product call me right now at 651.210.9593.