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With the spring market warming up, many people are going to be filling their weekends with house hunting. But if an affordable, move-in-ready space to fall in love with can’t be found, homebuyers shouldn’t avoid fixer-uppers or older homes. With a renovation specific home loan, potential borrowers can combine the purchase price and the improvement costs into the financing in one loan. 

At Norcom, we offer several loan options for renovations: FHA 203k, Fannie Mae HomeStyle, and the VA Rehab. Below, we’ll outline what you need to know about each type of loan so you can decide which fits your needs best: 

FHA 203k Limited 

  • 50% of funds are disbursed at closing  

  • Two Draws (50% at closing and 50% upon completion of work)  

  • If the file has a HUD Consultant, the HUD Consultant will complete the final inspection; If the file does not have a HUD Consultant, the appraiser will complete the final inspection  

  • Any changes to the original work order must be submitted to Norcom for approval prior to the work being started  

  • Borrower should not pay for anything out of pocket  

  • Any request for contingency funds must be submitted to Norcom for approval prior to work starting 

  • All items on original work order must be completed prior to any contingency disbursements 

  • A 203k loan cannot be used to pay for work that the FHA deems luxuries (ex. outdoor hot tubs, saunas, barbecue pits) 

  • A 203k loan is for a primary residence and cannot be used for vacation homes or investment properties 

  • Eligible properties include single-family homes, condos in a one-to-four-unit structure, or a qualified manufactured home 

  • The 203k Limited loan caps the cost of renovations to $35,000, however there is no minimum cost of repairs 

  • Work must begin within 30 days of loan closing  

  • All work must be completed within 6 months 

 

FHA 203k Standard 

  • No money will be disbursed at closing  

  • There is a 5-draw limit, which is determined prior to closing  

  • If the file has a HUD Consultant, the HUD Consultant will complete the final inspection; If the file does not have a HUD Consultant, the appraiser will complete the final inspection 

  • Norcom requires a progress update every 30 days  

  • Contractors General Liability Insurance must be valid through project completion  

  • Any changes to the original work order must be submitted to Norcom for approval prior to work being done  

  • Borrower should not pay for anything out of pocket  

  • Any request for contingency funds must be submitted to Norcom for approval prior to work starting 

  • All items on original work order must be completed prior to any contingency disbursements 

  • A 203k loan cannot be used to pay for work that the FHA deems luxuries (ex. outdoor hot tubs, saunas, barbecue pits) 

  • A 203k loan is for a primary residence and cannot be used for vacation homes or investment properties 

  • Eligible properties include single-family homes, condos in a one-to-four-unit structure, or a qualified manufactured home  

  • The 203k Standard loan allows for a project costing more than $35,000, however total improvements must cost at least $5,000  

  • Work must begin within 30 days of loan closing  

  • All work must be completed within 6 months 

 

Fannie Mae HomeStyle 

  • No money will be disbursed at closing  

  • There is a 5-draw limit, which is determined prior to closing  

  • If the file has a HUD Consultant, the HUD Consultant will complete the final inspection; If the file does not have a HUD Consultant, the appraiser will complete the final inspection 

  • Norcom requires a progress updated every 30 days  

  • Contractors General Liability Insurance must be valid through project completion  

  • Any changes to the original work order must be submitted to Norcom for approval prior to work being done  

  • Borrower should not pay for anything out of pocket  

  • Any request for contingency funds must be submitted to Norcom for approval prior to work starting 

  • All items on original work order must be completed prior to any contingency disbursements 

  • Can be used to renovate a second home or investment property, if it is an eligible property type 

  • Work must begin within 30 days of loan closing  

  • All work must be completed within 6 months 

 

VA Rehab 

  • Borrower must qualify for a VA loan to be eligible for the VA Rehab loan  

  • 100% Financing of purchase price plus improvements  

  • No monthly MI  

  • One closing for purchase and rehabilitation  

  • Maximum improvement cost cannot exceed $35,000  

  • 15% Contingency reserve required  

  • All work needs to be completed within 90 days of closing  

  • Contractor must be approved by Norcom Mortgage  

  • Both purchase and refinance options are available  

  • Rehabilitation disbursements are made when work is complete 

 

As a future homebuyer and potential borrower, remember that you have options, especially if you’ve found a house that’s not picture perfect, but the location is exactly what you had in mind. Reach out to our VP of Renovation Loan Programs, Charlie Napolitano to learn more about your renovation loan options.   

 


“If I don’t hear the word millennial at least 10 times a day, I think I might have lost my hearing” said Norcom’s Greg Radding on his podcast, Radding’s Rapport, at the end of February. Greg interviewed Mike Fratantoni of the Mortgage Bankers Association about the state of the mortgage market. Among other key points, they spoke about how millennial first-time homebuyers are now one of the largest drivers of the US market, and their presence will undoubtably have an impact on the mortgage industry.  

What it boils down to is in the United States, the most populous age group today are millennials. The typical first-time homebuyer is 31 or 32, so millennials looking to buy homes today are, as Fratantoni explained, “the leading edge of the wave of tremendous housing demand.” This explains why many in the industry believe the purchase market will continue to grow over the next few years. Whether we will see the demand in terms of millennial homebuyers themselves, or the potential landlords of millennial renters remains to be seen. 

One noticeable change for this age group from previous generations is that most millennials are waiting longer to begin the homebuying process. This change is due to multiple factors, including but not limited to, an increase in student loan debt. Furthermore, these homebuyers might be looking for different things in a first home than their parents or grandparents, and they’re taking their time to figure out the details! 

 

If you are looking to work with millennial first-time homebuyers, here are some points to keep in mind: 

  • Millennial borrowers value proximity to popular venues and shopping districts. 

  • One of the top factors for millennial first-time homebuyers is the quality of the local school district, whether they have a family yet or not. 

  • They are willing to put sweat into their home. Possibly due to the popularity of renovation themed tv shows, homebuyers have more confidence in buying an ‘imperfect’ home and investing in fixing it up and making it their own. 

  • Just as with news, commerce, and other fields, millennials are regularly turning to social media to help with the homebuying process. This generation relies on online reviews and recommendations to make purchasing decisions and to decide who to work with as a realtor or mortgage professional. 

  • Millennial borrowers are known for their in-depth research into a potential home before scheduling a showing or visiting an open house. 

  • Low or no down payment programs are quite popular with this group of first-time homebuyers. 

 

If you are a first-time homebuyer, we have more information here or reach out to your Norcom loan officer today!


Do you have plans to remodel a part of your home this Spring? Consider looking into sustainable materials and energy efficient appliances. A sustainable and environmentally friendly home is not only good for the planet but can also save you money over time. 

 

  1. Make energy-efficient upgrades. 

Updating large appliances will reduce your electricity and water bills. Look for product lines that have been endorsed by the Energy Star rating as a more efficient option. Replacing older windows, doors, roofing, insulation, and HVAC systems can also lower your heating and cooling expenses in addition to making your home more efficient.  

  1. Build with repurposed items. 

Using reclaimed wood is a great sustainable practice, as it does not require deforestation. Refurbished home goods not only add charm and style to your home but are a great way to avoid cheap products made in factories. Check out local antiques shops, flea markets, or unique building supply stores. You can find anything from light fixtures (that can be rewired to use energy-efficient bulbs), drawer pulls, hooks, to larger pieces like shelves and tables. Buying pre-owned materials is a proactive way to cut renovation costs. You can find local places reselling used hardware, plumbing, cabinetry, appliances, and countertops.  

  1. Research sustainably sourced materials. 

Look for building materials, furniture, and decorative items that contain post-consumer recycled content. If choosing repurposed or recycled items is not an option, try to find materials that are sustainably sourced. For example, lumber is certified sustainably harvested by the Forest Stewardship Council (FSC). Just like Energy Star, there are other certifications to look out for, such as GreenGuard, that indicate the level of sustainability of a material. Find such certifications here

  1. When in doubt, choose natural materials. 

A rule of thumb is that natural building materials are more durable and safest for your home. From cabinets to flooring, some building supplies are often made with formaldehyde, which emits into your home’s air, known as off-gassing, even after they’re unboxed and installed. This impacts your indoor air quality negatively. Other sealants and paints can also contain toxins called Volatile Organic Compounds (VOCs) that remain in your home and trigger health problems like migraines or asthma. When choosing the design for a kitchen remodel, it is especially important to choose safe and natural materials that will be in contact with food, like kitchen countertops. 

  1. Redesign with a classic look. 

Why? Because by choosing a classic design, you will avoid another remodel in the next ten years and avoid wasting materials. Additionally, you should be able to source classic materials locally instead of luxury or limited supply materials. Luxury items typically have a larger carbon footprint, potentially crossing oceans just to arrive at your house. By minimizing the distance any building materials need to travel, you’re helping to reduce harmful greenhouse gas emissions. 

 

We know it’s not reasonable to think that most homeowners can remodel their home to be completely “green.” But if you start with one choice at a time, making environmentally friendly decisions in small renovation projects, you can stay on budget, and save money in the long run. Your home will be healthier, more durable, and you will love your updated space. Plus, the earth will thank you!  

Don’t forget to research local or state tax credits or rebates offered to people who choose to make their house more energy efficient. 

 

Additional Resources 

 


When it comes time for a mortgage, many borrowers choose to buy their home with another person. Whether it is a spouse, parent, sibling or other trustworthy person, it is important to know what to look for in a “purchasing partner,” including the difference between a co-borrower and a co-signer.  

A co-borrower will be a co-owner of the property with their name on the title of the home after closing. Their level of involvement also means that the co-borrower's assets, credit history, employment history, and debts are assessed because they are applying for the home loan right along with you. 

co-signer applies for the loan with you (remember they’ll have their credit pulled to assess their ability to qualify for the loan), but their name will not be on the title of the home. They are connected to the loan and are financially responsible, along with you, for paying back the mortgage, but do not have ownership rights to the property. 

The main distinction between the two roles mainly pertains to the ownership of the property. A co-borrower has the advantage of co-owning the property with their name on the title of the home. If, for some reason, you are unable to make payments, the co-borrower can assume ownership of the property. A co-signer is not on the title and would not have the same rights. 

The most important factor to remember is to choose someone you trust and who is financially responsible. A co-borrower or co-signer can assist you with qualifying for a better interest rate because of debt-to-income ratios or various other factors, but you both carry the responsibility for making sure payments are made on time. If unforeseen circumstances mean your co-borrower or co-signer can’t make their agreed-upon part of the monthly payment, you are still responsible, and the same goes for them. 

If your purchasing partner has a higher credit score and you’ve saved for a down payment, this is a perfect example of a team effort that will secure a home loan for you together when you might not have been able to do it on your own. Make sure you take some time to think through who might be a solid, trustworthy co-borrower or co-signer and discuss the options to determine if it is the right fit for everyone. When you’re ready, have a conversation with your Loan Officer to get started! 


Show Your Home Some TLC

Feb 12
11:39
AM
Category | General

It’s almost Valentine’s Day. While you may be busy planning a three-course dinner or a rom-com movie marathon with your pals, don’t forget to show your home some TLC this season!

Redecorate in a small way

Has it been a while since you last made changes to your living space? You’d be surprised at what a difference small changes can make in your attitude towards your home. It might be simply adding a wreath to the front door or printing some new photos at CVS or Wal-Mart to swap into your tabletop picture frames. One fun idea, if you have an Instagram account, is to print out your favorite square photos from the last year and arrange them in a photo gallery on the wall! If you use a non-damaging adhesive, such as Command strips, you can always change out one image for a new favorite.

Buy a new houseplant

While roses are the ubiquitous symbol of Valentine’s day, opt for a potted rose bush this year instead of a bouquet of cut flowers! Depending on what you choose, you can keep the plant alive indoors for years to come or transplant it into your garden after the last frost. What a beautiful way to commemorate this holiday of love.

Invest in smart tech

Just as your loved ones occasionally want an upgraded smart phone or fitness tracker, so could your home. Refresh your home entertainment with a new Bluetooth music player for the kitchen or a surround-sound system for the living room. Or think outside the box, and protect your home with a new smart security system. You may even find some great deals this month if you look for President’s Day sales.

Rent a steam cleaner

Show some appreciation for your area rugs and carpets with a deep clean! Whether that means hiring a company or renting a steam cleaner, your rooms will be on their way to appearing brighter and rejuvenated after a good clean.

Purchase new towels

As we’ve blogged about before, a pop of color can make a big difference in your living space. If you have a discount home store in your area, you can find new bath and kitchen towels in an array of bright or calming colors. If you want to get the most bang for your buck, steer clear of holiday-themed towels with images and phrases, and opt for your favorite solid or patterned colors.

 

When you’ve finished these small home updates, plan a Galentine’s party or a candle-lit dinner date share your refreshed space with guests!


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