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Frequently Asked Questions for Major Rehabilitation
Additional Home Loan Questions
Does my customer have to purchase
and rehabilitate a Home to qualify? Yes, your customer must be buying a Home which needs improvements that equal or exceed a third of the original purchase price of the Home. If your customer currently owns a Home they will refinance the mortgage on the Home they currently own and include the rehabilitation cost into one loan. Do I have to provide
the interim financing for the rehabilitation period? No, we will provide both the interim and permanent financing so you'll only have one closing. What is the minimum down
payment required for major rehabilitation loans? The minimum down payment is 10% of the lower of the total purchase price or the appraised value of the property after improvement. How do I calculate the purchase
price and maximum loan amount? 10% of the rehabilitation costs is added to the purchase price in case there are cost overruns. Maximum loan amount may be determined differently depending on whether or not the loan involves a purchase or a refinance. The Major Rehabilitation Worksheet (Home Form 25) will be very helpful in determining the amounts you'll need to qualify your borrower. When can the rehabilitation
work begin? Rehabilitation work can begin once you've closed the approved loan and sent the mortgage to the Register of Deeds' office for recording. You'll want to ensure the priority of the mortgage over any mechanic's liens. Are there specific types
of properties that qualify for major rehabilitation? Properties may be single family residences or duplexes. Properties must also have been residences for at least 20 years prior to the date on which rehabilitation begins. What kinds of rehab projects
qualify? As long as the total cost of the improvments equals or exceeds a third of the original purchase price of the Home, most repairs, modernizing, permanently affixed redecorating and additions will qualify. For major rehabilitation
loans, should the appraised value of the property be determined "as-is"
or should the value include the improvements? The appraiser should be given copies of all of the contractor estimates and should determine the value of the property subject to the improvements being completed.
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