I was reading Brian Brady’s blog Mortgage Rate Report, and he was discussing the new demand for renovation financing for buyers. Brady discussed the need for creative renovation financing, as mortgage rates will rise in the coming months. As many distressed properties are on the market and coming on the market, perspective buyers are looking for ways to purchase these distressed properties at significantly discounted prices and finance the improvements needed in their loans.
Also, going green is also become extremely popular for homeowners. Potential home buyers are looking for tax credits and special financing in order to make their homes more energy efficient. The IRS is currently offering a partial tax credit for energy efficiency improvements. Brady goes on to describe the 5 loan programs where buyers are financing over the purchase price for energy efficiency and other home improvements:
These loans will become even more popular as potential buyers continue to purchase bank foreclosures and short sales. Many times, these distressed sales need many structural and cosmetic updating along with energy efficiency upgrades. Remember, that financing over the purchase price means that the property must appraise for that price. It is essential to work with a mortgage broker and Realtor that specialize in the above financing. These are not the easiest loans to put together, so do your homework and work with true experts.
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