Every Monday Morning at 8:15am, join me on my Facebook page as I sit down with a local lender, and do a live interview and talk about a Mortgage Tip that may help YOU with your next Real Estate Purchase. 

This morning I sat down with Justin Froiland from Fairway Mortgage. Listen as Justin describes a unique loan most home buyers are not aware of. You can reach Justin at 605.695.1429 or justin.froiland@fairwaymc.com.  His office is located at 412 5th St., Brookings SD 57006 or on the web at www.BrookingsMortgage.com 

 Conventional Homestyle Renovation Loan

- Good morning everybody, Shane here from the Brookings Home Team powered by Century 21. We're getting back in the saddle again after this Thanksgiving weekend. I hope everybody watching here had a great Thanksgiving and you got full of plenty of turkey and ham or whatever else you decided to have. But, Justin here has graciously said he would jump in here after our busy Thanksgiving weekend. Thanks for doing that.

- Yeah, no problem.

- And, we're gonna take 15, we're gonna do a Monday morning mortgage tip. But before we do that guys, remember as you jump on here give us a heart, give us a thumbs up, let us know you're coming on and as always, if you have any questions for myself or Justin, his information will be on the top, on the bottom or on the sides, wherever your device allows you to see that. So, with all that stuff out of the way, what is the tip for today, Justin?

- Perfect, thanks for having me today, Shane. Today I wanted to talk about a somewhat unique loan program that's out there that doesn't really get talked about a whole lot simply because there's not many places out there that offer it. And that's the conventional homestyle renovation loan. And actually, to my knowledge, I'm the only lender here in town that actually offers this program. There may be some other ones, I'm just not aware of it. But what it is, it's kinda like a home improvement, renovation type style loan where, easiest way I can explain this to give an example. So, let's say there's house that's listed for sale for $150,000, but in order for you to get that particular property to your liking, you need to stick, maybe an extra 50 grand into it. Maybe, you wanna build a detached garage. You wanna do a kitchen make-over, redo a bathroom. Really, the options are endless. So let's say the house is listed for 150, you wanna put another 50 in, how that works is you write up that offer to pay the sellers the 150, but then before we get that appraisal ordered in the process, we have you go and visit with the contractor and get all of the bids, plans, blueprints, estimates, all that stuff put together. Once we have that finalized, then we then take that and we provide that paperwork to the appraiser. Then we ask the appraiser to go out to the property and provide a value that is subject to that work being completed. So, the value that they're gonna give us would be as if that work was already completely finished and done. And, so that's a way to structure a deal to allow you to make some improvements right out of the gate if you don't have that extra money sitting in the bank to utilize for that. It is a little bit more lengthy of a product, it can't close quite as quickly as your normal purchase. There's a few other hoops to jump through. One thing that throws a quite a few people off is if you're the do it yourself type of guy, that, unfortunately, is not gonna be an option because you do have to have a licensed contractor complete that work. And so how that works is that if everything comes to fawisha, one of the other risks that you sometimes run with anything that has to do with construction is you don't always get a dollar for dollar rate of return on your work. And so, just because you're putting 50 grand into this property does not mean it's necessarily gonna increase that property by $50,000. And so, that's one risk that you run. It does happen where it's a dollar for dollar increase in the right scenario. But, if everything comes to fawisha like that, once the loan closes, the seller is paid their 150,000 and then the builder completes that work after closing and then the builder is paid that extra 50,000 after that work is complete. And so, again, it's a little bit more lengthy of a program, a little more hoops to jump through, a few more hoops to jump through, but it can be for the right property and the right client out there can be a very, very good program.

- Yeah, it's not the cut and dry, typical, conditional..

- No.

- Conventional loan there, so.

- Nope, nope, nope.

- There are some t's to be crossed and i's to be dotted.

- Yup, and, one last thing I'll throw in there too Shane is that there is actually another program that's called the FHA 203K loan, which is very similar but it's even less fun to jump through those hoops, 'cause then you're working with the government's regulations and there's even more hoops to jump through. But yeah, there are a couple different options out there that don't get talked about very often.

- You bet. Maybe that'll be a next more broader podcast that we could do later on.

- Yup, definitely.

- So, great tip, great information for this post-Thanksgiving weekend. We are into December guys, 2019 is almost done. I wanna thank Justin and all my lender friends for doing this, so we're gonna continue on doing it. I appreciate everybody watching. So, if you have questions for us, you know we're always looking for questions. We wanna hear from you. Let us know, drop that question in the comments below or wherever, or reach out to us and let us know. We wanna see what you guys have questions for as well, but, thanks again for watching. We'll be back next Monday. Monday morning mortgage tip. Have a great week and stay warm guys. We'll see you later.

- Thank you.

Thinking of selling and/or moving to Brookings, Volga, or any surrounding areas? Got questions? I’m here to help! Visit BrookingsHomeTeam.com for more details!