One of the things I love most about my East Atlanta neighborhood is the Craftsman style of home that is ever present. I live in a Craftsman style bungalow myself. Many of these house were built long before our parents were born. Some of these homes were recently renovated, many cheaply, and very few of these renovations were true to the Craftsman style. They need to be renovated again, but this time renovated correctly; true to style, energy efficient and fully GREEN. Where do we start?

Planning, Prep & Research

Renovating a home is not a one man job, you need a TEAM. How do you build a winning team? Unless you have lots of cash you’ll need to start with financing. Financing green renovation projects requires special loan products, like FHA 203K and Fannie Mae Homestyle used in conjunction with an Energy Efficient Mortgages (EEM). Not all lenders offer these products and even fewer have the knowledge, expertise and connections to pull it off. When it comes to choosing a lender you need to do your due diligence. There are questions that you need to ask and that they need to be able to answer without hesitation. If they can’t answer them you need to keep looking. It doesn’t matter how great your Realtor, Architect, or Contractor are if you can’t get the financing to complete your project. Your lender is your quarterback, you need a Tom Brady not a Derek Anderson.

Once you feel secure that your renovation lender has the goods to get your loan done you need to start gathering the rest of your team. If you are purchasing then your next addition is your Realtor. Successful lenders know successful Realtors so you can always start you search there. However, sometimes your lender may be in a different location then you are and may not be able to connect you. In this case you’ll need to do your own research. Social media, blogs, word of mouth and referrals are the best way to go. If your green renovation is a refinance then obviously the a Realtor is not always needed. However, in a refinance situation a Realtor is great source of information on after repair value which can play a key part in getting your loan done.

Choosing a General Contractor

Some of you are probably asking “don’t I need an Architect first”? The answer is yes and no. Quality General Contractors either have an Architect on staff available at a reduced costs if you use their services OR know plenty of good Architects to refer. In my opinion, it is best to speak with a GC first to get an idea of who they know as well as get a ballpark number for the renovations to make sure they fit in your budget. A Contractor won’t be able to give you an exact quote on a green renovation that involves a square footage addition without Architectural drawings, but they can give a ballpark number to provide to your lender to ensure you don’t have loan qualification issues. Be aware that if you are financing your green renovation project the lender is also going to help you vet your contractor. We want to make sure they are licensed correctly, insured and financially secure just as much as you do.

Choosing an Architect

As I said before, really good contractors have really good connections with really good Architects. However, don’t blindly accept a General Contractor recommendation. Make sure your choice for ANY green renovation is LEED certified. Check their work, visit past projects and contact previous customers to ensure you make the right choice. You’ll be spending a lot of time and money with them, choose wisely.

Choosing the right team along with planning and preparation will not only save time, money and effort it will minimize your risk that things could go poorly. The preparation stage is the most important stage in the green renovation process. Now that you have a winning team assembled let’s talk about the renovation process itself.

Where to start, what materials to use, how to get the most out of materials you already have and how to make your home as energy efficient as possible are all coming in part 2 of this series! Don’t want to miss it? Make sure you go to Facebook.com/FHA203K and LIKE our page. We’ll keep you up to date on ALL things renovation and make sure you don’t miss the next part of our green renovation series! You can also follow @JKBlackwell on Twitter to get the latest.

All across the USA unfinished new construction foreclosures sit unoccupied and available at drastically reduced prices. A result of the housing bust and the credit bubble, left without the money to continue, builders walked away in droves from properties they haven’t yet finished. Nearly impossible to sell due to lack of suitable mortgage products, these homes represent some of the absolute BEST VALUE on the market. The trick is figuring out how to get a mortgage.

Conventional financing won’t work on an unfinished property. FHA 203K loans require a Certificate of Occupancy which is unattainable if the property was never finished. If you lack the funds to purchase in cash you have but one option, the FANNIE MAE HOMESTYLE renovation loan. So, what is this miracle loan and how does it work?

Fannie Mae Homestyle Renovation Loans

The Homestyle Renovation loan works much like a FHA 203K would. You get yourself pre-approved with a Fannie Mae Homestyle approved lender like myself. You locate the property that is substantially complete, but not yet finished. Most underwriters consider “substantially complete” to mean at least 75% finished. Anything less and you have yourself a construction loan, that’s a different post.  Once the property is located you get it under contract at a great price. We then submit your loan to underwriting for credit approval. While we await your credit approval we gather the contractor bids from a licensed General Contractor. We provide those bids to the appraiser who will appraise the property based on the “as completed” value.  Usually, we have your credit approval before we are finished gathering the bids and getting the appraisal. Once we have that we will simultaneously work on clearing your credit conditions while we work on getting the property, contractor and scope of work approved. Once we have everything cleared through underwriting you’re ready to close. Now starts the renovation phase of your Homestyle Renovation project!

The renovation escrow account that is dispersed post close is based on your contractor bid + a 10% contingency reserve along with any scattered renovation related fees we rolled into your escrow account. We’ll disperse the funds in a series of draws ranging from 3 to 5. Each draw will be inspected by a third party before funds are released. Please make sure your contractor is aware that the Fannie Mae Homestyle, much like the standard FHA 203K, does NOT HAVE UPFRONT FUNDS AVAILABLE. You need a strong contractor with sufficient cash flow to successfully complete a Homestyle Renovation! Once all the work in the final contractor bid is completed you can close out your renovation escrow, from that point forward you have a traditional Fannie Mae loan.

Simply and easy right? ; ) Still have questions? Call or email me and I will guide you through the process. All in all if you are looking for a new home and you want it cheap, this is the absolute best path to take. You will not only get the value of a home available at a deep discount due to lack of financing, but you will also get to finish out the home with your personal touches, energy efficient improvements and the contractor of you CHOOSE!

APPLY NOW for your FANNIE MAE HOMESTYLE RENOVATION LOAN!

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