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Regular Contributor
-RazziTammi-
Posts: 143
Registered: ‎06-11-2009

Re: FHA Title 1 Loans?

Thanks Mickie, Okay, so maybe I'm incorrectly figuring out how the value after renovations is determined. Overall, I would be going from 2 bedrooms 1 bath to 3bedrooms 2 baths, adding about 500 sf living space. Homes comparable to this, in my neighborhood, are selling for $15-20K above my current loan amount. Renovations will cost about 15K. So I was thinking that I would be good. But it sounds like you're saying that they base the value after renovation on the cost of the work itself? Ie., This bedroom costs $15K to add, so my home would be worth $12K more than it's current value?
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Lender provided FICO's:
6/19/09 - EFX, 694; TRU, 693; XPN, 723
7/8/09 - EFX, 688; TRU, 705; XPN, 723

CLOSED August 31, 2009!!!
Regular Contributor
-RazziTammi-
Posts: 143
Registered: ‎06-11-2009

Re: FHA Title 1 Loans?

Thanks Brian, I need about $15K for the work. I am also considering just getting a separate loan for the renovation and maybe refinancing it into my mortgage later. It would be nice to just put it in with my mortgage now and get a lower rate, but I'm not sure the higher MIP, fees, and restrictions are worth it. Am I likely to off set the higher MIP amount with a lower rate? ( I'm at 5.25 right now).
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Lender provided FICO's:
6/19/09 - EFX, 694; TRU, 693; XPN, 723
7/8/09 - EFX, 688; TRU, 705; XPN, 723

CLOSED August 31, 2009!!!
Senior Contributor
mickie08
Posts: 3,299
Registered: ‎04-22-2008

Re: FHA Title 1 Loans?

LTV will be based on the value after the work is done.    So assuming right now you are at 100% ltv of say...150K home.  Then you put 15K into the home for the remodel.  Say it then adds 20K in value (133% return on investment which is totally unheard of).  That would mean that you now owe 165K on a 170K home.  That leaves you at 97% LTV. 

 

Do you already have etimates for adding the room and bathroom.  15K seems really low and you do not want to lowball something like this.  If it is a new bathroom and all plumbing has to be run, the plumbing alone should be in the 5K or more range, yet alone all of the finishing in the bathroom and the new bedroom.  You also will have to have all new electric work done and all permits, etc.  When doing this type of loan, there are no real shortcuts to minimize costs as they want to make sure the work is done correct, fast, to all codes, and will give the needed return for the LTV.  Unless you are a licensed GC, all work will have to p=be done by professionals and will costs a bit. 

 

BTW, not trying to questions your judgement in any way, I am just wondering if those numbers are hard numbers or a figure you came up with.  I am sure that where I live things are a bit more expensive.  But where I live, the basic plumbing and electric work would run me close to that 15 grand, yet alone drywall, texture, paint, trim, windows/doors, and bathroom fixtures, etc..  

Regular Contributor
-RazziTammi-
Posts: 143
Registered: ‎06-11-2009

Re: FHA Title 1 Loans?

Hi Mickie, That is a rough estimate from a professional licensed & insured Contracting company. He actually quoted $12K just for the labor and I added $3K for materials which is pretty low. So adding some cusion for materials, I am expecting it to be $15-20K. Thankfully the attic already has alot of the major things needed for the finish; good windows, plumbing source, and electric. So that brings down some of the labor costs. The bathroom was quoted as $5-6K just for labor. I'm expecting that and the heating & cooling to be the biggest cost. Everything else is basic finishing work, so that quote sounded reasonable to me. Last year I had a Guy that came in and started talking about raising the roof and taking out windows (none of which needs to be done). He quoted me $30K and that was the number that I had in my head at first. But after speaking with the most recent contractor and him going through what needs to be done I'm thinking $15K-20K is about right, but I do plan on getting 2 more quotes before taking out a loan. And all permits/inspections will be completed. I'm definitely looking to get this done the right way.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Lender provided FICO's:
6/19/09 - EFX, 694; TRU, 693; XPN, 723
7/8/09 - EFX, 688; TRU, 705; XPN, 723

CLOSED August 31, 2009!!!

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