Home Buying in 98661>Question Details

Ryan Lounsbu…, Home Buyer in Vancouver, WA

My wife and I love the old craftsman houses but won't have a lot of extra cash for renovations. Is it possible to build some cash into mort for reno?

Asked by Ryan Lounsbury, Vancouver, WA Fri Feb 22, 2013

My wife and I are first time home buyers and of course we watch the renovation shows on TV but know full well that we can't do such projects ourselves. We also love the craftsman houses downtown which will likely need some renovation. Is it feasible to get additional cash in the mortgage for renovations on the house? I've read about 203k renovation loans from FHA that can be rolled into the Mortgage. Are there any other vehicles for this?

Help the community by answering this question:


As first time homebuyers, you have a lot on your plate. A 203K Rehab loan is a complex product with specific timeframes that have to be met and very tight rules that need to be followed. Managing these details, while overseeing construction and discovering surprises, which accompanies all rehab jobs, won't be the something that just anyone should take on.
I don't know you, so I'm not saying you shouldn't do it, but I want to express that the normal level of stress associated with a major purchase, loan and a move are magnified greatly when you add all of the other elements you are considering.
It might be worth putting the rehab project off until your next purchase. After you've gone through the normal purchase and done some home projects that are more manageable you may find it to be what you are looking for.
I've done electrical, drywall, plumbing, redone baths and finished basements, but I had experience and no outside time or financial constraints other than a wife, kids and a job at the time.
If you decide to move forward with this type of project, don't forget to budget for dinners out, time away from the project and unexpected surprises hiding deep in the walls.
Best of luck however you proceed.
0 votes Thank Flag Link Fri Feb 22, 2013
I completely agree with your advice! We certainly don't want to make our first home purchase and have it be a total fixer upper. The focus is on move in ready homes; but, if we happen to find the ideal house that needs some minor updates it is nice to know that we the option to do it.

We do fortunately have lots of family and friends in real estate/construction industry which can help give us a good idea whether or not it's a project worth tackling or not as well.
Flag Fri Feb 22, 2013
Ryan, if you would like to have your renovations done sooner rather than later, there are FHA 203K rehab loans and Fannie Mae Renovation loans. The ins and outs of these type of loans are too extensive to discuss in this posting, but these two types of loans will allow you to finance the cost of improvements and certain repairs to the home you are looking to purchase. Dan is right. These loans can be cumbersome and they are more expensive and complicated than a regular FHA or Conventional loan. It is imperative that you work with someone who has experience with these rehab loans. I have my certification to do these type of loans, and HomeStreet Bank is actually one of the first lenders in the country to begin doing these type of loans. Our company, in my opinion, does them as well as anybody else out there.

For more details, you can contact me at 503-810-1119. Just a caveat: these rehab loans do not cover every type of repair or remodel, so when the time would come to know what type of rehab and repair you would need, a lender would need to know immediately to know if there are any repairs and/or rehab that is not covered.

Good question and good comments by everyone

Paul W Thompson
Mortgage Consultant
HomeStreet Bank
NMLS #404052
2 votes Thank Flag Link Mon Feb 25, 2013
I echo Dan's comments. I'm a first time buyer right now and it has become a huge hassle. And I'm trying to buy a turn-key ready place! A remodel must add a huge burden. There can be a lot of crazy stuff to deal with on getting the loan so if I were you I'd do this right now if you haven't already.

- Start shopping around for a good mortgage broker, learn everything you can about the process, and get pre-qualified. Ask every question you can think of and take notes. It's complicated.

- Find a knowledgable realtor who knows the process of short sales, conventional, and everything in between

- ask, ask, ask because they won't offer everything upfront and be very clear where you're getting all your down payment money since that makes a difference to the lender

Just my two cents, for all I know you guys handle stress great. I just want to get in and be done and have found even that proves to be difficult.
0 votes Thank Flag Link Sat Feb 23, 2013
Your best bet would be to check with local banks. Local banks can offer products that are different than all the larger mortgage programs out there, but you can expect to pay 1-2% higher in interest rate. But you can always refinance it after the repairs are done and you have an appraisal to support the value.
0 votes Thank Flag Link Fri Feb 22, 2013
I've banked with a local credit union and my goal is to shop around at local credit unions primarily. I try to support local business as much as I can.
Flag Fri Feb 22, 2013
I'm glad my answer was helpful. Major renovations can be a headache. Doing some cosmetic things however can be fun and allow you to personalize your home when you get it. Some paint, floor coverings, crown molding, chair rails in the dining rooms are all great projects that are manageable and satisfying.
My question for you is, what will be different next year than today or sooner. I'm not in your market, so I'm not trying to earn your business, but rates are incredibly low and starting to trend up. Prices are also showing signs of rising in many markets. This combination could make the wait a very expensive one if it were possible for you to buy sooner.
No one knows for sure what will happen down the road, but if home ownership is a desire and affordability is a question, consider meeting with a lender and great Realtor sooner to map out a plan rather than later. If things will be better later, you'll have a great plan in place to maximize your outcome.
If you want some names to some great Realtors in the area, let me know. I may have some great options for you, now or later.
0 votes Thank Flag Link Fri Feb 22, 2013
I should note that we are looking at what is out on the market right now so we can get a better idea of what we really want when we are ready to actually look to purchase.
Flag Fri Feb 22, 2013
There are two items that are keeping us from moving forward with house hunting at the moment. The first and real road block is that we have no down payment at the moment. The second is that we want to have our consumer debts paid off before assuming a mortgage. This gives us peace of mind mostly but should also help in being able to afford more house.
Flag Fri Feb 22, 2013
I have a downtown listing that will be going public in about 2 weeks. remodeling is already done..
get in touch with me, and I'll send you information on the house, the day before it goes public.

if you are planning rennovations with a home to be purchased, the 203k is the best way to finance the improvements, but does not provide funds for do it yourself. Your credit union may have personal line of credit, or your credit cards, but in my opinion, its better to get the bids and amoritize it at 3.5% (current interest rate), over 30 years

As Dan wrote below, you have to have the bids from professional contractors and the timelines must be met (typically 60 -90 days). I could be wrong.. but I dont believe they allow DIY do it yourself, because of the risk of it not getting done, during the specified timeline.
0 votes Thank Flag Link Fri Feb 22, 2013
Dan is right on in his advice.....
Again thoigh I would strongly advise a free community home buyer class to help you learn more in a relaxed and no pressure environment. :-)
0 votes Thank Flag Link Fri Feb 22, 2013
We will definitely look into home buyer classes when we are ready to look into mortgages and actually house shopping.
Flag Fri Feb 22, 2013
Thank you for all the quick answers everyone! We are still a year away from getting serious about getting into the details regarding a actual mortgage. For the moment we are paying off our outstanding debts so all we have left are some student loans then saving up a down payment.

I just wanted to know if it was realistic, in the right situation, to get extra money out of the mortgage to make some minor/moderate updates if we do settle on an old craftsman/portland four square style house.

Thanks again everyone!
0 votes Thank Flag Link Fri Feb 22, 2013
Being a first time home buyer may I suggest a first time home buyers class? There are some free, non-promotional 3 hour classes at ymca, and marshall center in vancouver that could help you with your questions.
I am sure if you called both places they could let you know when the next one takes place.
There are programs available to help....
Good luck!
Tracie DeMars
0 votes Thank Flag Link Fri Feb 22, 2013
Hi Ryan

The FHA 203k program is one of the best I know to do this. Their are many different lending products out there and you best source of advice on that is a lender, may I suggest a good one I have know for 10years to see what products he has available based on your current goals and qualifications. His name is Cody Steinmann at Alpine Mortgage, 360-991-8920.

Always happy to help. If you have any questions or if I can help in your home search just give me a call anytime.

Thank you

Troy Jensen, Buyers Agent
Professional Realty Services of WA
0 votes Thank Flag Link Fri Feb 22, 2013
Rochelle Gano at Evergreen Home loans is an expert at this. She is local off Mill Plain and an expert at construction and Rehab loans. She has a program that might work perfect in your situation. Feel free to call her at 360-281-1642 or email rgano@evergreenhomeloans.com. Her website is http://www.ganoknowsloans.com

-James Holcomb 360-281-5611
0 votes Thank Flag Link Fri Feb 22, 2013
There is a conventional loan product also available for this type of property, too. I'd be happy to connect you up
with a couple of great lenders who can go over the program with you in detail. I'm an old house lover, too, and would live to help you with your purchase if you don't already have an agent.
0 votes Thank Flag Link Fri Feb 22, 2013
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2016 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer