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HOMESTYLE RENOVATION MORTGAGECapstone Direct, Inc.
Feb. 2017
Benefits of Renovation Loan
Not every home is move-in ready. Single-close loan includes renovation funds in the amount financed
Single loan for financing the mortgage, repairs and upgrades, based on the “As-Completed” value of the home
Eliminates the need for a second mortgage or the need for a refinance to pay off a construction loan
Loan Terms
30 and 15 year fixed rate mortgages only No ARMS at this time
Property and Renovation Eligibility
1 to 4 Unit Owner Occupied 1 Unit 2nd Homes or
Investment (Non-Owner) NO manufactured homes
Any type of renovation or repair is eligible
Must be affixed to the property and adds value
Maximum Loan Amounts
Purchase Loan to value is based on the
LESSER of• Purchase price and cost of
renovation OR• The ‘As-Completed” Value given
by the appraiser Use the HomeStyle Renovation
Maximum Mortgage Worksheet to calculate the max mortgage amount
REFINANCE Loan to value is based on dividing
the original loan amount by the “As Completed” appraised value of the property
Borrower cannot receive any cash back (lower of 2% or 2K)
Use the HomeStyle Renovation Maximum Mortgage Worksheet to calculate the max mortgage amount
MAXIMUM LOAN TO VALUES
95% 1 Unit Principal residence
85% 2 Unit Principal residence
75% 3-4 Unit Principal residence
90% 1 Unit Second Home
85% 1 Unit Investment
75% 1 Unit Investment - Refinance
Hazard and Mortgage Insurance
Borrower must have hazard insurance in place to cover the estimated “AS-Completed” value of the home after renovation
Mortgage Insurance, if required based on LTV, must be in place before closing and coverage is based on the estimated value of the home AFTER renovation.
Contractors
Borrower must choose contractor Lender must review the contractor
• Adequately qualified and experienced
• Licensed
• Insured
Borrower must have a construction contract with their Contractor Plans and specifications must be prepared by a registered, licensed or certified general
contractor or architect. The plans as specifications should fully describe all work to be done and provide an indication of when various jobs or stages of completion will be scheduled (including Start and Job completion dates).
Renovation Costs
Limited to 50% of the “AS Completed” appraised value of the home May include:
• Labor and Material
• Soft Costs (Architect fees, permits, licenses)
• Contingency Reserve
• 10% of the cost of labor, materials, and soft costs
• Optional unless the property is 2-4 Units
• Payment reserve –
• Up to 6 months – only if the home is uninhabitable