“Construction and Renovations Loans”
Hello Joe,
I hope you are doing well! I’m writing with some different questions than I had last time we caught up.
I’ve moved up at work and have been working 3 days a week from our Boston office, and expect another move up that will keep that going for quite some time. Additionally, I think at some point a few years down the road I’d want to have the flexibility for my mom to move in.
With all that, it seems to make sense to get a bit closer to 84 (to ease the commute) and find something with a bit more room/more amenable layout for future flexibility. Also, it seems like we may be in a sweet spot of having some equity but being able to do something before rates go up more.
For the next house, I definitely want to fulfill my interior design dreams and would want to either go the 203k route (which I feel I know enough about to start looking), but I am also curious about building. It’d be nice to be able to go all out with energy efficiency and not have to worry about major costs for a good period of time.
I did some initial research about construction to permanent loans. What I was hoping to chat about with you would be:
1. What are the big things you think I’d need to know?
2. It sounds like a good down payment is needed and that the lender would want to see some money in the bank to cover two potential payments for when the current home is listed and the new one is finished. How do we go about knowing if we have enough on these fronts?
3. What type of down payment is needed on this type of loan to avoid PMI?
4. Any other underwriting stuff that is “stricter” we’d want to be prepared for? What are the DTI limits?
5. What is the pre-qualification process like here?
I do have a few other 203k questions. The main things I would love to avoid for this next home buying adventure are having to move out of our place before we have a new one (especially because I am confident this would sell quickly) and PMI!
Thanks so much as always Joe!
-Steph
So many banks, credit unions and lenders just don’t do these loans. Mostly because they are a lot of work, but we do them like breathing. They are easy to do if you know what you are doing. The lenders we use know we know how to do them, so they go smoothly for us.
