Finding a Lender and contractor go hand-in-hand. We have talked about interviewing and hiring an architect and contractor. The final piece before you start the renovations is finding a lender and identifying the right Renovation Loan program for your project. There are tons of lenders in Atlanta, but not very many do renovation loans. Here is the criteria that we used and looked for in our lender.
Criteria for Finding a Lender
- Very good at communication and responsive to questions we have.
- Must have an understanding of the different types of renovation loans.
- Must be able to get things done in a timely and efficient manner.
There are not many Renovation Loan Programs out there, but finding a lender that
understands and knows how to do a renovation loan program is essential. Finding a lender is will the same process as hiring a contractor and architect. Here are a few steps to do before you start interviewing lenders.
Items to do Before Interviewing Lenders
- Research the different types of renovation loan programs. Familiarize yourself with the types of renovations loans. This will help you narrow down which ones fit the scale of your project. We had three choices of renovations loans. They were the Hud 203k Renovation Loan, Hud 203k Streamline, and the Homestyles Renovation Loan Program. The Hud 203k streamline would not work because it is for cosmetic renovation from $5,000 – $35,000. So that left us with two choices Hud 203k and the Homestyles. We chose the Homestyles because it was less restrictive, less fees, and lower mortgage insurance.
- Get a list of questions together to ask lenders that you are interviewing.
- Research lenders online to find out who does the types of renovation loans you are looking for.
- Review your budget and where you would like to keep your payment. Convey those two things to the lenders that you are interviewing.
Where to Find Lenders
Since I am in real estate, finding a lender for me was easier. I have come across many lenders over the years and had a good idea of which mortgage brokers do renovation loans. Finding a lender for me was easier. Use a lender that is local. If you are renovating a home in Smyrna, try and find that is closer to you. My lender was in Marietta, so he knew the area well. That was good because when we had appraisal issue, he was really an asset. They are easier to deal with and you can meet them at their office if necessary. As long as the lender is local then you will be fine. For someone who is not in the industry, here are some ways to find a lender that does renovation loans.
- As a Realtor or a friend who has done renovations before.
- Drive around your neighborhood or area and see what projects are going on. Talk to the owners about their lender that they are using.
- Here is a link to 203k Renovation Loan Lenders.
- Finding a Homestyles Renovation Loan Lender will take a little more work. I would start with a good google search and then start calling the ones you find. Also I have a good one. His name is John Bohannon of Movement Mortgage. If you want to talk with him let me know and I will get his contact information for you.
Questions to Ask When Finding a Lender
Here are some questions that we used when interviewing lenders.
- How long have you been in the lending industry?
- Tell me about your and your company.
- Do you have experience with renovation loan programs?
- How many or how long have you been doing them?
- What loan programs do you recommend for our type of project?
- Can you explain to me how different renovation loan programs work?
- Do you have any literature on the different renovation loan programs?
- How do you effectively communicate with you clients?
- Whom else is on your staff? Will we be talking to them as well?
- Will you be involved in the entire process?
- What will you need from us to get started?
- Do you have a fee sheet for the renovation loan we decide to use?
- How long is the approval process for a renovation loan?
- Will we need to use a HUD consultant for our renovation loan?
- Do you have any references that we can call and talk to about you and your service?
Choosing Your Lender
Just like hiring a contractor, you will start to weed out the lenders that you feel will not meet your expectations. If a lender is very familiar with the renovation loan process, they will be able to explain the process in way that you will understand the basics. Make sure you stick to your criteria of what you want in your mortgage broker you choose to use.
Side Bar – HUD Consultants
On renovation loans – you will be required to use a HUD Consultant. The Hud consultant is on your side and will have valuable information. The HUD consultant has been part of hundreds of renovation loans so they have tons of experience that can help you. It does not matter if your home is in Cobb County, Atlanta, or Marietta they will be able to help you through the renovation process. There job is to take the contractors bid and put in on a form that the bank uses to do an after renovation appraisal. They also are in charge of the draws. For a renovation loan there are five draws. This will be discussed in more detail on the blog post about the Homestyles Renovation Loan. A Hud consultant usually costs $1000. We had to make a $545 initial payment and the the rest was rolled into the loan.
To fully understand all aspects of renovation loans is hard. You really have to go through it to get a great working knowledge of it. There will be times where it is frustrating and overwhelming, but that is just part of it. These are complex loans and are more difficult to do than a standard home loan to buy a house. Don’t let that scare you away. You can do this. Finding a lender who know these types of loan will make it much easier for you to understand.
Steps in the Renovation Process
- We are renovating Step 1: A step-by-step guide to renovating your home
- Renovating our home step 2: Hiring the right architect
- Renovating our home step 3: Hiring the right contractor
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