The Complete Guide To Spring Home Improvement Financing

Page 1 of 12
The Complete Guide
To Spring Home
Improvement Financing
NMLS #110139
AmeriFirst Home Mortgage 800.466.5626
Page 2 of 12
The Complete Guide
To Spring Home Improvement Financing
Table of Contents
Page 3 ……………………….. Welcome and Introduction – Spring Has Sprung
Page 4 ……………………….. 10 DIY Home Improvement Projects for Spring
Page 5 ……………………….. 10 “Need Help” Home Improvement Projects for Spring
Page 6 ……………………….. How to Finance Upgrades on the Home You Own
Page 7 ……………………….. How the FHA 203k Can Help You Refinance, Renovate and Stay
Page 8 ……………………….. A Growing Family, A Growing House
Page 9 ……………………….. Mold, Leaky Roof and Too Many Problems: Renovate or Run?
Page 10 ……………………... Yes it’s Called The But Loan®
Page 11 ……………………... More Home Buyer & Homeowner Resources to Download
Page 12 ……………………... How to Contact AmeriFirst Home Mortgage
Jeremy Drobeck
Loan Originator
NMLS #130817, OH LO.026916.000
AmeriFirst Home Mortgage
950 Trade Centre Way, Suite 400
Kalamazoo, MI 49002
Office: 269-324-4240 Ext.10132
Fax: 269-585-5997
Direct: 269-488-9494
[email protected]
1stClassMortgageService.com
NMLS #110139
AmeriFirst Home Mortgage 800.466.5626
Page 3 of 12
Introduction – Spring Has Sprung
Spring is a season of renewal. Baby birds, tree buds and spring cleaning. It’s also a great time for homeowners
to tackle home improvement projects. Whether it’s painting a bedroom with the windows open or some
sprucing up the landscaping, there’s a lot you can do to freshen up your house a bit.
Some homeowners may look around their home they’ve had for awhile and think “It’s time to make a change.
We love this house but it’s time to upgrade.” If this is you, you’re probably already thinking about the current
housing market and falling home values. Selling a home right now may not be all that alluring to you. And
forget about a home equity line of credit to pay for improvements. Some homeowners have enough equity to
pay for home improvements that can make the “old house” feel like a “new home.” However, a vast majority
of homeowners do not. In fact, many homeowners owe more on their mortgage than the value of the house.
If you’re one of these underwater homeowners, you may be able to find help with the second round from the
Home Affordable Refinance Program – or HARP 2.
For a large chunk of homeowners who want to finance home improvements, there’s a tried-and-true solution
that’s kind of a hidden gem. It’s called the FHA 203k. This mortgage option allows a homeowner to refinance
and roll the cost of many different types of home improvements, repairs or renovations into the life of the
loan. This means you amortize the costs over the 30-year note (a typical mortgage term).
This guide is meant to offer ideas for do it yourself home improvements if you’re not looking to refinance your
home, as well as show you how you can turn your current home into your dream home without packing up
and moving.
You are free to print this guide and share with your friends and family, too. If you know a homeowner who
wants to spruce up their home, let them know they have options. You can share this in person or online. We’re
on Facebook and Twitter. Connect and let us know you’re sharing it!
NMLS #110139
AmeriFirst Home Mortgage 800.466.5626
Page 4 of 12
10 Diy Home Improvement Projects For Spring
Spring Fever: It affects even the least do-it-yourself driven person. Maybe it’s time to clean out the junk drawer
or the closet. Maybe you’re itching to plant flowers and pick up sticks in the yard. Or if you’re looking for a little
more action, maybe you’re ready to paint a bedroom or the living room. Whatever your level of DIY experience
and desire, here’s a list of 10 home improvement projects you can do yourself to spruce up your home.
1. Spruce up landscaping. From flower beds to mulch and bush trimming, you can find a lot of supplies at a home improvement store to take care of this kind of work. Sprucing up the yard can make a huge difference in how your house looks.
2. Power wash the house. Maybe you see dried grass clippings from last year or cobwebs. You could buy
or rent a power washer and do this each season.
3.
Clean out gutters. Buy a ladder and clean your own gutters. You could also clean them out from the roof, but use caution. Sometimes hiring a professional is the best way to handle this.
4. Replace old door handles. This is an easy way to spruce up old doors. Plus it’s like changing your passwords - new locks are a good safety tool!
5. Plant seedlings to have trees (someday). Add some flowering trees so next spring you’ll have a beautiful yard.
6.
Re-paint a bedroom or 2. It’s amazing how much of a difference a fresh coat of paint makes. Whether it’s a bedroom or a living room, freshly painted walls are a blank canvas for redecorating your home.
7.
Re-organize kitchen cupboards with new removable
shelving. Putting in wire shelving can help make your cupboards useful again. Throw out the things you haven’t used in a year or more. You might be surprised at how much room you have when it’s organized well.
8. Replace old appliances in the kitchen. From the old toaster you got at a garage sale to the refrigerator that came with the house, replacing any old appliance will help give your kitchen a facelift.
9. Garage cleaning and organizing. New cabinets and shelves can go a long way toward making an old garage look new. Install hooks and pegboards to hang all those tools. Once it’s cleaned, you could even paint the floor!
10.Re-decorate the bathroom. Update the showerhead and fixtures for an easy fix. New rugs and a shower curtain help, too.
NMLS #110139
AmeriFirst Home Mortgage 800.466.5626
Page 5 of 12
10 “Need Help” Home Improvement Projects for Spring
Some home improvement projects you just ”need help” doing. Whether it’s the fear of electrocution or the
worry of a wet house, hiring the right person to make your improvements go smoothly and safely is the right
choice for many home improvement projects. Here’s a list of 10 of those projects that can help turn your
average house into your dream home.
1. New windows. Maybe you noticed over the winter that it was drafty in the house. Find a contractor to help replace old windows with new, better-insulated windows.
2. Roof repair/replacement. Winter can be hard on a roof. Ice dams, snow melt and freezing winds can all create serious problems. Consider hiring a professional to fix that roof.
3. Plumbing problems. Maybe your pipes froze or you noticed your pipes are just old. Replace the plumbing and roll the cost into an FHA 203k refinance.
4. Replace old doors. While you can replace door handles (see above) fairly easily, replacing doors with better, newer models may take a bit more work.
5. Kitchen renovation. New cabinets/counters and new appliances can really go far in making your home feel like new. Roll these costs into one mortgage (it’s not a HELOC or second mortgage) with the FHA 203k.
6. Add a bathroom. Maybe your family has outgrown the 1-or-2-bathroom design of the home. Adding a bathroom is best left to the work of a professional.
7. New deck construction. From design to the construction, a new deck can add great value and better experience to your house. If you can find the time and skills to do it yourself, go for it. But a contractor may have better tools and more time to get it done faster and better so you can enjoy that deck.
8.
Basement waterproofing. Eradicate mold (or the possibility of mold) and keep it away with a waterproof basement. Plus once it’s waterproofed, you can finish it and turn it into that man-cave (or woman-cave) you’ve always wanted!
9.
New siding. Upgrade from old, cracked and peeling wood siding to something more modern. You can also have the home insulated a little better during this process. Imagine changing the entire look of your home with a new color and look!
10.Electrical upgrades. From the junction box to new plugs, upgrading an electrical system can help save you money on the bill and help make your house feel like new. Maybe you want ceiling fixtures with wall switches. Hire a professional electrician and avoid the shocking results of doing it yourself.
NMLS #110139
AmeriFirst Home Mortgage 800.466.5626
Page 6 of 12
How To Finance Upgrades On The Home You Own
You have a few options for financing home improvements: home equity loan, home equity line of credit, store
credit, credit cards, save up and pay cash, or the FHA 203k. Let’s look at the options you have, and the prosand-cons.
Home Equity Loan / Home Equity Line of Credit
(HELOC): Borrowing money based on your home’s
equity works well if your home has enough equity
to cover the cost of the home improvements.
The amount of credit you can get is based on the
current equity, before the improvements are made.
In this way you’re limited as to how much work you
can do to the home. Also, the HELOC is a second
mortgage on the house. This means any refinancing
you might consider takes into account the fact that
you have 2 mortgages.
Store Credit: Store credit (also called revolving
credit) is considered one of the riskiest lines of
credit you can have. Many times the advertisement
of zero-interest is only for a limited time, and often
includes accruing interest. That means if you don’t
pay it off in the time allowed you have to pay all of
the interest added up. Imagine financing $10,000
worth of items for home improvements and not
paying it off – the money adds up quickly and
puts a real dent in your finances. But if you can
borrow that kind of money and pay it off before
the penalties hit you, then store credit is certainly a
viable option.
Credit Cards: Credit cards can work great for a lot
of people. For those who charge and pay it off every
month, you avoid high interest rates and can even
receive incentives like mileage or cash back. Financing minor home improvements on a credit card may not
be a bad thing, but financing a new kitchen is probably not a wise choice. Plus, many contractors and builders
probably don’t take plastic. But maybe they do. We still don’t think credit cards are the way to go.
Save Up & Pay Cash: If you’re a subscriber to the Dave Ramsey lifestyle, this is your best bet. You don’t want to
borrow money when you have the patience and ability to save up money and pay for projects as your finances
grow. This is great when you have that kind of patience and discipline. We can’t argue with cash.
FHA 203k: Meet the king of home improvement loans: FHA 203k. This option allows you to roll the cost of
repairs and renovations into the mortgage. This is not a second mortgage. It’s one FHA mortgage that includes
funds to make the home improvements. This means you’re not paying off a huge home upgrade project in just
a few years. The costs of your projects are amortized over the life of the mortgage. Plus the interest rate is the
same as your loan. NMLS #110139
AmeriFirst Home Mortgage 800.466.5626
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How The Fha 203k Can Help You Refinance, Renovate & Stay
Now that you know your home improvement financing options, let’s take a look at how you can put the FHA
203k to use for you. Yes, it’s a great loan for home buyers. But did you know you can refinance your current
home into the FHA 203k? You can borrow the money to make the home improvements you want or need,
all based on the after-improved value of the home. Instead of basing the borrowed money on the current
appraisal, the FHA 203k looks at the appraisal for the improved home.
Imagine a home with no deck, only one bathroom and an outdated kitchen. You could try to sell, leaving
behind the neighbors you now count as good friends. Hopefully the house sells (even with the outdated
kitchen and lack of deck) and you find the right home you want. Once you’ve moved out and into your new
house and made friends with the neighbors you should be good. Or you could pay for the home improvements
with the FHA 203k, adding about $6 a month to the mortgage payments for every $1,000 in work you finance.
The deck, additional bathroom and new kitchen may add up to around $25,000. This means you might
add another $150 to your house payment (depending on how much you need to roll in from the original
mortgage).
The FHA 203k covers most home improvements you want, as well as needed repairs. Below is a list of eligible
repairs. Essentially luxury items like tennis courts, BBQ pits and spas aren’t covered.
Renovation Mortgage Projects
Repair/replace roof, gutters & downspouts
Buy & install appliances including washer/dryer
Repair/replace/upgrade existing HVAC systems
Repair/replace septic systems and/or well
Repair/replace plumbing & electrical systems
Disability access like wheelchair ramps, elevator
Replace/repair flooring (carpet, tile, wood)
Abatement/stabilization of lead-based paint hazard
Minor renovations in kitchen or bathrooms
Build/repair/replace decks, porches & patios
Interior or exterior painting
Basement finishing & waterproofing (excluding structural)
Weatherization including storm doors or insulation
NMLS #110139
AmeriFirst Home Mortgage Replace windows, doors and siding
800.466.5626
Page 8 of 12
A Growing Family, A Growing House
Imagine buying your first home and watching your family outgrow it. All those memories…you don’t have to
leave it. As your family grows, so can your home. With the Standard 203k you can make structural changes to
your home like adding bedrooms or bathrooms, expanding a kitchen or dining room or even adding a second
story to the home!
The Standard FHA 203k covers home improvement projects that will change the structure of your home. You
can literally “pop a top” on your ranch house and double your square footage if an appraiser can find similar
homes – called comparables – in the area.
Adding onto a home like this means you
can increase your area much cheaper than
of you were to sell the home and buy new,
or build a home from scratch.
You can use the Standard 203k when the
home improvements exceed $35,000
(the max amount for the 203k Limited) or
when you need to make structural repairs.
There must be a minimum of $5,000 worth
of repairs. FHA loan limits are based on
property type and location of the property
being financed. A portion of the loan
proceeds are used to pay off the existing
mortgage in a refinance. The remaining
funds are placed in an escrow account and
released as rehabilitation is completed.
You may also roll in up to six months of
mortgage payments if the HUD consultant
determines you need to be displaced from
the home during the repairs, as you might
be in the case of a major renovation.
You can make the following repairs and
renovations to your home with the Standard 203k:
• All of the improvements listed in the eligible improvements for a 203k Limited.
• Structural alterations and reconstruction, like room additions, repair of termite damage, major remodeling of kitchens and bathrooms, finishing an attic or basement, adding a second story to a home, etc.
• Major landscaping and site improvement including correction of grading and drainage problems, tree removal and repair of sidewalks and driveway, if they are a safety hazard to the property.
NMLS #110139
AmeriFirst Home Mortgage 800.466.5626
Page 9 of 12
Mold, Leaky Roof & Too Many Problems: Renovate Or Run?
Problems like a leaky roof in the spring as the snow melts, or a wet, moldy basement may seem overwhelming.
Don’t let it drive you away from your home!
When winter’s over we often find the remnants of autumn. Old leaves in our yard that we missed before the
snow fell remind us that our trees once had beautiful color. A leaky basement may remind us that every spring
we have to deal with porous concrete every spring. It could also mean our downspouts are too close to the
house and we’re in need of new gutters. Whatever’s going on, it could mean an annual headache we just want
to get away from any way we can.
When it comes to needed renovations and repairs, the FHA 203k comes to the rescue like a knight in shining
armor. Issues like an old roof, bad shingles, a leaky basement and mold are all eligible for FHA 203k financing.
If the work does not affect the structural integrity of the house, then you can take advantage of the 203k
Limited. However, if your basement waterproofing or sill plate replacement involves the home structure, you’ll
need to upgrade to the Standard 203k.
It’s up to you to decide if you want to renovate or run. Refinancing into a 203k and making the needed repairs
to a leaky roof or moldy basement may take time, effort and patience. Then again, so does selling a house with
these issues and finding a new one that’s flawless. The FHA 203k is one route to take in financing these repairs.
You could certainly try for a home equity line of credit depending on the current home’s equity. You could also
try to fix these problems yourself and pay cash or use your credit cards. It’s all up to you to weigh the benefits
of renovate vs. run.
Weighing the cost of repairs with the cost of selling, buying and moving will help you decide whether it’s time
to move or it’s time to fix the existing problems. Let the FHA 203k be your guide in this decision.
Problems like a leaky roof in the spring as the
snow melts, or a wet, moldy basement may
seem overwhelming. Don’t let it drive you
away from your home!
When it comes to needed renovations and
repairs, the FHA 203k comes to the rescue like
a knight in shining armor.
NMLS #110139
AmeriFirst Home Mortgage 800.466.5626
Page 10 of 12
Yes, It’s Called The But Loan
Let’s have a little fun. Let’s say you look around your house right now and say, “I really like this house BUT I
would love it if it had…” Just about anything after that ‘but,’ you can finance with the FHA 203k. It’s why at
AmeriFirst Home Mortgage we call it the But Loan®.
Here’s a look at the top 10 reasons people want to leave the house they’re in.
“I’d stay in this house BUT” …
1. We need another bathroom.
2. We don’t have enough bedrooms.
3. This kitchen is old and dated.
4. These kitchen appliances are old and inefficient.
5. The flaking paint around the house makes me nervous. Is it lead based paint?
6. The basement is cold and damp and I’m worried about mold.
7. My mother in law needs to move in and we want to convert the basement into her own little apartment.
8. The plumbing in this house is older than me and it makes me nervous.
9. It doesn’t have central air and I’m tired of putting ice cubes in front of box fans.
10.The concrete and stone patio is ugly and I’d rather have a nice wooden deck. And a screened in porch.
Each of these “but problems” is solved with the But Loan mortgage program. You can refinance the home
and make the improvements, solving your but problems. It’s why we call the FHA 203k the But Loan. Click the
picture below to watch the video. You can also visit www.ButLoan.com
Click here to watch
The But Loan Song
There was a slider
NMLS #110139
AmeriFirst Home Mortgage 800.466.5626
Page 11 of 12
More Home Buyer & Homeowner Resources to Download
AmeriFirst Home Mortgage has produced several guides to the home buying and home improvement financing
process. Below is a snapshot of the e-Books we have to offer. Click a cover to learn more and download a
complimentary copy. Feel free to share them with other home buyers you may know!
NMLS #110139
AmeriFirst Home Mortgage 800.466.5626
Page 12 of 12
Let Us Know How We Can Help
For more than 30 years, AmeriFirst Home Mortgage has helped first time home buyers realize the dream
of leaving that rental behind, and owning a house. Whether it’s conventional lending, an FHA program, VA
loan, USDA Rural Development or a 203k mortgage loan, the team at AmeriFirst is here to find the right
mortgage for you. See where AmeriFirst is licensed for mortgage lending at the AmeriFirst office locator here.
<www.amerifirst.com/office-locator>
We’re easy to find.
The website: AmeriFirst.com
Find us on the “usual” social media sites as well.
Read the blog and keep up with the industry so you can be an informed borrower.
Photo attribution in accordance with Flickr Creative Commons:
Spring flower (cover): Duncan
Spring (page 3) Jordan Fischer
DIY brushes (page 4) Alan Cleaver
Deck project (page 5): Chris Darling
Money jigsaw (page 6): Images of Money
Old house (page 8): Robin Zebrowski
Copyright Notice & Legal Notice
© The AmeriFirst Home Mortgage Corporate Office
950 Trade Centre Way, Suite 400 | Kalamazoo, MI | 49002
AmeriFirst Home Mortgage is a division of AmeriFirst Financial Corp.
Feel free to share this eBook (AT NO COST OR OBLIGATION) with anyone you want to. All rights reserved. While attempts
have been made to verify information provided in this publication, neither the author nor the publisher assumes any
responsibility for errors, omissions, or contradictory information contained in this document. This document is not intended
as legal, accounting or investment advice. The reader of this document assumes all responsibility for the use of these
materials and information.
Not all borrowers will qualify; contact us for more information on fees and terms.
NMLS #110139
AmeriFirst Home Mortgage 800.466.5626