The 6 People Intimately Involved In Your Home Renovation Loan

Home improvement projects are on the rise, as more and more people realize that there are amazing values to be found on the real estate market today, especially those homes that need a little rehab work. However, if you don't plan on paying cash to buy and fix up a home, then you need to know these 6 people who will be intimately involved in your home renovation loan.

1. Home Improvement Loan Officer.

If you need financing for your home renovation project, then you will need a loan officer who specializes in rehab projects. Look for a lender who can handle all ranges of home improvement scenarios, from minor renovations to full, major tear downs. This way, you know that your loan officer is well versed in a project of your scope.

What you don't want to do is settle for a loan officer who doesn't work daily on home renovation loans. There are plenty of lenders out there who can do simple purchases or simple refinance loans. In fact, you may have a loan officer whom you have worked with in the past. But, if he or she doesn't know home rehab loans inside and out, then you're going to go through serious delays and unnecessary headaches - as well as pay way too much.

The loan officer's job for a home renovation loan will be to secure the best financing possible for you and process your file for underwriting. In other words, you will work closely with your loan officer through the entire planning and financing phase.

2. Real Estate Agent.

Most people who shop for a new home will hire a realtor as their Buyer's Agent to help them find the right property that best fits all their preferences. However, you will want to hire a realtor who a) works almost exclusively as a Buyer's Agent, and who b) is an expert in property renovations.

If your realtor is not accustomed to acting as a Buyer's Agent, then he or she will not be best suited to represent your needs during the transaction. There are many real estate agents who do the bulk of their business as a Listing Agent, meaning they represent the seller of the home. In your case, if you're looking for a new property to buy and fix up through a home improvement project, then you definitely want a realtor who is accustomed to representing the buyer during the transaction. You'll get better service and a keener insight to the important issues facing a buyer.

Similarly, look for a realtor who has extensive experience with home renovation projects. This way, your realtor can work with you to list out potential renovations and repairs to make to the property. It will be very helpful to have an expert with whom to bounce ideas back and forth.

3. Home Renovation Appraiser.

Every home renovation loan will require an appraisal that estimates the market value of the property in its current condition as well as the future value of the property once the home improvement project is completed. It seems like a simple thing, but the appraisals are such a vital part of every home rehab loan today that the appraiser warrants his own listing in this article.

If the appraisal for your loan is not done properly, the financing will never be approved in underwriting. Or, at the very least, the appraiser will have to go back out to the neighborhood to collect further evidence to support the numbers in the appraisal. This will cause you delays and potentially money. Therefore, if you are in the market for a home renovation loan, be sure you pay close attention to who is doing the appraisal - it could make or break the deal for you.

4. The Home Improvement Consultant.

Most home renovation loans nowadays are done through the FHA 203(k) program. If the home rehab project meets certain criteria based on the scope of the work to be completed, then the home rehab loan will require that you use an FHA approved consultant. The consultant will visit you at the property to list out all of the repairs and renovations required. At this time, you can also add any extra renovations you would like to make.

For example, the home may not require new countertops, but you may want them to update the style of the kitchen. Therefore, the consultant will compile the list of planned renovations and provide an estimate of the projected costs. For major home rehab projects, this will be extremely useful for the borrower.

5. Home Improvement Contractor(s).

Every home renovation loan will have at least one contractor. In the simplest case, you will hire one home improvement contractor to cover all of the renovations. However, sometimes, you will hire individual sub-contractors, such as plumbers, electricians, etc.

In either case, the key to hiring the right contractor is the bidding process. You should request bids for the work you plan to complete from at least three contractors. Your home renovation loan officer should be able to assist you with the process. If you execute the bidding process properly, you'll save a lot of time and money. If you rush through this phase, you will suffer the consequences during the actual rehab. So, speak to your loan officer about it as early as possible.

6. Your Closing Agent.

The closing agent for a home renovation loan is no different from the closing agent for any other mortgage. Depending on the state in which you live, you may work with either a title company, a closing attorney, or an independent closing agent.

In principle, they will all serve the same function of organizing and recording your actual closing documents and deed to your property. The only key point is that you ought to work with a lender who allows you to choose your own closing agent if at all possible. This way you'll be sure to choose someone who works in a convenient location and with whom you are comfortable.

Overall, being familiar with these 6 individuals will make your home renovation loan go much more smoothly. If you are thinking about starting a home improvement project without first considering all of the people with whom you will work, then you are setting yourself up for unnecessary delays and headaches. Your home renovation loan will be much simpler if you understand the roles of all the players involved.