HomeStyle renovation loans create new buying options for borrowers all across the country. For many reasons, the time could not be better for using this financing, which allows you to fund a purchase and renovations in a single loan.
Why the Time is Right for Using a HomeStyle Renovation Loan
1. Recent Increases to the Loan Limits
One of the most significant reasons that you should consider a HomeStyle Renovation loan right now is quite simple, and it actually applies to all loans in general: loan limits have increased. The 2019 loan limits allow for greater purchasing power among borrowers. Across the nation, the lowest limit is $484,350, up from $453,100. This means that no matter where you live, you should be able to borrow at least $484,350, which allows for more options when it comes time to purchase.
In San Diego, however, the limit is increased even further. The current limit on conventional loans in San Diego has been increased from $649,750 to $690,000, giving you even more purchasing power.
These limits not only increase the amount for conventional loans, they also increase the limits for HomeStyle Renovation loans.
2. The Purchase Market is Cooling
Alongside increased loan limits, there has also been a steady cooling in the housing market. Housing had previously seen rapid increases in the average home prices, with white-hot areas like Seattle, New York, San Diego, and San Francisco seeing massive price increases. Now, it appears that trend is steadily cooling, as home prices have slowed their rapid increase.
As the purchase market cools, the home prices will at least stay relatively steady. This allows borrowers to make a better purchases with the money they have (in other words, buyers can get more house with every dollar), and, as we’ll discuss below, forces sellers to work with borrowers who are using atypical purchasing strategies, such as renovation loans.
3. Sellers are More Willing to Work with Buyers Using Renovation Loans
As a direct result of the cooling market, which has seeing lowered prices and a shift from a “seller’s market” to a “buyer’s market,” more homeowners are willing to work with buyers who are using renovation loans.
In a seller’s market, the person selling the home can call the shots; buyers have lots of competition and sellers can be fairly picky about which buyer they want to sell to. Because borrowers using renovation loans are not as attractive to sellers, buyers may experience difficulty if they are using a HomeStyle loan, especially in a hot market.
However, as the market cools, sellers will look to sell their home to just about anyone they can, so they may be willing to work with a borrower who wants to renovate the property.
4. More People Are Interested in Home Renovations
There is now a trend of many DYI homeowners who are willing to perform their own renovations.
5. Current Homeowners Holding More Equity Increase Refinance Options
There are has also been a climb in average equity among homeowners, which means more people can take advantage of HomeStyle Renovation loans for refinancing. The upward trend in home equity appears to be happening in both the short and long term.
A report from HousingWire says that home equity in late 2018 had jumped an average of $16,153 in a single year. This represents a 12.3% increase from the previous year. While the increase in equity appears to have occurred all across the country, California had the largest increase, with a gain of $48,800 in average equity. Between 2017 to 2018 saw significant increases, but it appears to be a continuation of previous trends that started years earlier.
A May 2018 article from The Mortgage Reports states that a similar increase occurred between 2016 and 2017.
With more equity in the home, homeowners have a better chance at qualifying for a HomeStyle Renovation refinance loan. If you are a homeowner with significant equity and the need for renovations, this could be a good option.
Much of the equity gains came from people simply making payments on their mortgages, but that doesn’t tell the whole story. Besides, people taking on new mortgages will drive down the national averages, so there must be other factors at play. One such factor is the increase in home prices, which (while the increase may have slowed) still remains high.
6. Home Prices Remain High in Many Areas
Yes the market is cooling. Yes, sellers of higher-priced homes are more willing to accept offers with renovations loans. But the simple fact remains that homes are still expensive, which means the purchase of a fixer-upper is an attractive option for getting a better deal.
This is especially true for areas that remain hot, including San Diego. Consider the prices of San Diego next to other major-market locations. According to realtor.com, the median home price for property listed on their site in San Diego is $598,000. Compare that to the median listing price for other major cities:
- Chicago: $299,500
- Houston: $279,900
- Miami: $399,900
- Philadelphia: $190,000
- Cleveland: $126,000
- Minneapolis: $289,900
- Denver: $385,000
Numbers as of Feb. 4th, 2019
There are certainly other areas that have similar or higher prices (New York, Washington, Boston, and Seattle come to mind), but San Diego consistently ranks as one of the most expensive markets in the country.
Fortunately, HomeStyle Renovation loans create a solution to this current problem by allowing borrowers to purchase lower-priced homes that, when renovated, will meet a higher standard of living. With renovation loans, you can find an affordable fixer-upper in a high-priced market.
7. Mortgage Rates Expected to Continue Rising
The time is right for HomeStyle loans for another important reason: interest rates are expected to climb. Overall, interest rates have been on a steady upward trend, and, according to many sources, this trend is expected to continue. If you wait to use a HomeStyle Renovation loan, you will likely find that interest rates have increased, so it’s best to take advantage of interest rates as they currently stand.
Renovation Loans Available Now Through SDPL
If you need help choosing the right renovation loan for your next purchase, contact San Diego Purchase Loans.
We have a knowledge, experience, and dedication to service that makes us the ideal lending agent in San Diego and the surrounding area!
I was amazed how quickly Chad was able to knocked out our refinance!
I highly recommend Chad he & his team did an incredible job! I had 3 others I was working with, including a Credit Union. Chad was able to offer me a lower rate with no fees! Based on the other 3 top financial bids I had for this refinance. ”
Chad and his team were very attentive to all of my needs, they called , emailed and checked in often. No question was left unanswered! Maria was a superstar! taking all my calls no matter the time or day and walking me through every process. The follow through was amazing and I am just so happy that my realtor referred them to me. I was originally referred to another lender that pretty much had no time for me nor did they even bother to try and find me the right loan since I am a widow with one income and a first time buyer with so so credit. I am completely happy with my loan and everything they did for me! Thank you Chad, Maria and Karina for all you did!
Chad Baker and his team are amazing!
My husband and I found Chad through an article he had written. Every aspect of working with Chad and his team was exceptional. From our initial phone call where he explained the many options we had, to advice he gave in dealing with somewhat challenging sellers, and closing our loan ahead of schedule, the loan process with Chad and his team went very smoothly. I especially appreciated the one-on one guidance from Juliann, who really made me feel like I was her only client. I look forward to working with Chad and his team again and would highly recommend them to anyone looking for a mortgage.