The Parent Team is proud to announce our “Dreams with Beams” program, which gives borrowers a better option for renovating the home of their dreams. When you utilize a Renovation Loan, you’ll gain access to our collaborative, cloud-based renovation loan software to manage the entire project from start to finish while simplifying communication between you, the builder, 3rd-party inspectors, and title companies. We manage your loan and the builder relationship in-house, and you’ll work with a dedicated account manager throughout the renovation process.

What are renovation loans?

A home renovation loan is a type of mortgage designed to finance either a purchase or renovation of a fixer-upper home. Unlike traditional mortgages, the renovation loan’s interest rate is based on the value of the home after renovation is complete. This allows homeowners to tap into their future equity to get the lowest interest rate possible. Renovation loans can also be used to refinance and renovate a home the borrower already owns.

Renovation Loans Quick View

  • Up to 100% financing for USDA and VA
  • Finance up to 100% of home value after work is complete for (USDA and VA loans)
  • Borrow up to 97% of your future home’s value (FHA)
  • Qualify with a lower credit score
  • In-house draw management by The Parent Team employees
  • Home appraisal, inspection, and plan approval required
  • Simple and secure online application

Update a primary residence fixer-upper with a 203K renovation loan

203K loans are guaranteed by the Federal Housing Administration (FHA) and are often used by families in low- to moderate-income brackets to purchase or refinance a primary residence in need of repair. The funds can be used for minimum repair work such as adding a new room or landscaping. It can also be used for repair that’s more extensive such as plumbing, kitchen remodeling, or accessibility improvements for people with disabilities. However, anything considered a luxury is not allowed. The FHA defines “luxury” items as things like tennis courts, swimming pools, hot tubs, and outdoor kitchens.

The main benefit of a 203K home renovation loan is the lower credit score (640), down payment (3.5% minimum), and debt-to-income ratio (50%) than our conventional HomeStyle loans allow. However, anyone with a 203K renovation loan will pay mortgage insurance premium (MIP). It’s 1.75% of the loan amount upfront then 0.8% spread out in monthly payments for the life of the loan.

Nevada home with contractors renovating kitchen

Restore an old home or get a dream home with a HomeStyle renovation loan

HomeStyle loans are guaranteed through Fannie Mae and have a more restrictive credit score minimum (680), down payment (5%), and debt-to-income ratio (45%) than a 203K. However, they have much more relaxed restrictions on the types of renovations that can be done. Funds can be used to remodel a primary, secondary, or investment property. And they can be used to finance a wide range of renovation projects, from repairs and modifications to pools and outdoor kitchens. Borrowers can use the funds to restore an old home to its original glory or take a neglected house and make it their dream home.

Mortgage limits are capped depending on the area a home is located in. See the current conforming loan limits. There is no upfront MIP, but without 20% equity in the renovated home, a borrower will have to pay monthly MIP payments for a period (or until they reach 20% home equity).

Which home loan option is right for you?

It can be hard to determine which option is best for you. Your credit score, amount of down payment, scope of your project, and final costs all need to be considered. If you have enough equity in your home, a cash-out refinance may be preferable to a home renovation loan. If you’d like to purchase a fixer-upper or if you’d like to make improvements to your current home, contact your local Parent Team at USA Mortgage professional to go over all the loan options available to you.

If you’re interested in building a home in Las Vegas or across Nevada, The Parent Team can help you make it happen. Please contact us today or apply online in less than 10 minutes using the secure online application below.

Reverse Mortgage Quick View:

• Option to eliminate monthly mortgage
• Borrow up to 75% of the home’s
• You can still leave your home to your heirs
• Flexible income and credit qualifications
• For primary residence only
• No prepayment penalty
• Simple & secure online application

How much money can you borrow?

The amount of money a borrower can get through a reverse mortgage is dependent on their age, the current reverse mortgage/HECM interest rates, their current mortgage balance if they have one, and what an independent appraiser determines as their home’s current value.

Most home lenders require the homeowner retain 20% equity in their home (this keeps the borrower from having to pay any sort of monthly private mortgage insurance). Home equity is the difference between what a homeowner owes in a mortgage compared to what their home is worth. If a home is worth $300,000 and they owe $150,000 on their mortgage, they would have $150,000 in home equity.

Key responsibilities of homeowners with a reverse mortgage

Homeowners with a reverse mortgage have three main responsibilities:

  • The borrower must in the home as a primary residence
  • The borrower must maintain the home in good condition
  • Taxes, insurance and other home ownership cost must be paid

Pros of a reverse mortgage

It may be a good option for homeowners with limited income and a lot of equity in their house. They can use the equity to receive cash for expenses or other needs. The reverse mortgage could also be used to pay off their initial mortgage so they will no longer have to make monthly payments.

Cons of a reverse mortgage

The principal balance will increase over time as the interest and FHA MI fees accrue. Be aware that if a borrower isn’t using the home as a primary residence, it may result in the loan needing to be paid back sooner. If the borrower vacates the property for more than 12 months for medical reasons or six months for non-medical reasons, the balance of the loan will be due and the borrower will have to pay the loan balance.

What will a reverse mortgage cost?

Upfront, borrowers will pay an origination fee, closing costs, and an FHA MI fee of 2% of the home’s appraised value. Ongoing costs include an annual FHA MI of 0.5% of the outstanding loan balance. When the loan is due, the principal and interest are collected.

Will you still have to pay utilities and other bills?

Yes. The title of the home is in the borrower’s name, so they are responsible for property taxes, utilities, maintenance, and any other expenses. In fact, if you do not pay your property taxes, your lender may require you pay back your loan in full. Some lenders may set aside a portion of your loan each year to be used to pay taxes and insurance.

Do you lose your house with a reverse mortgage?

No, you do not sell a house to the mortgage company with a reverse mortgage. During and after the reverse mortgage, the home remains in the homeowner’s name. In this way it is similar to traditional forward mortgages.

 family sitting outside in grass

Can you still leave your home to your heirs?

Yes, but they will have to pay back the loan balance before the title is free and clear. They could either refinance or otherwise pay the balance and keep the home or sell and use the proceeds from the sale of the house to pay the loan. If they sell the home, they will have to pay either the balance of the loan or 95% of the home’s appraised value (whichever is less).

If you’re interested in building a home in Las Vegas or across Nevada, USA Mortgage can help you make it happen. Please contact us today or apply online in less than 10 minutes using the secure online application below.

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Made My House-Buying Experience Great

I used Derek and his company when I purchased a condo on the Las Vegas strip. Everyone said that banks were giving a hard time for people looking for a loan for this building. However, Derek personally called me and walked me through the process, and assured me that I would be able to get the loan. Within 30 days, we not only got the loan but closed escrow. I highly recommend Derek and his team!

Pathjoel from 89158

We are loyal to Derek Parent and his team

Derek is always a pleasure to work with. I’ve known him for several years now and anyone that I know of that is looking to purchase a property I always refer them to Derek. He takes the time to answer questions and really cares about his clients. It’s nice that he stayed in touch with us long after we’ve purchased our properties going through him and his team.

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They were always responsive to my needs and allowed for a smooth process. All of the processing took place in a timely manor and there were no hold ups on their end. I would highly recommend this group to anyone in need of a mortgage.

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