Jul 2 2019 38376 1
New Loan by Freddie Mac’s All Inclusive loan and Renovation
Freddie Mac today announced its CHOICE-Renovation loan offering, which provides homebuyers a flexible choice to purchase a home and finance the cost of renovations with a single-close mortgage, saving them both time and money.
The Choice-Renovationmortgage is designed to help address the nation’s aging housing supply, support the need for affordable housing, and offer renovation, repair, improvement or refinance options to support the increasing demand for cost-effective financing solutions. The Freddie Mac CHOICE-Renovation mortgage is available immediately to all eligible lenders nationwide.
“Research indicates a large number of older homes need repair and renovation, either to meet the needs of current owners or as a viable option for new homebuyers. The CHOICE-Renovation solution gives borrowers the opportunity to make improvements, renovations and upgrades to a home using a purchase or no cash-out refinance loan that will be eligible for sale to Freddie Mac. This provides the borrower with a convenient cost saving option for financing renovations.”
The CHOICE-Renovation offering is unique in that the program proceeds may also be used to renovate or repair a property that has been damaged in a natural disaster or for renovations that will help the borrower prevent damage from a future disaster, such as work on storm surge barriers, foundation retrofitting, or retaining walls.
The renovation market has grown by more than 50% since the Great Recession ended in 2009. The U.S. market for home improvement and repairs is more than $400 billion annually, according to the Harvard Joint Center for Housing Studies. Nearly 80% of the nation’s 137 million homes are at least 20 years old and 40% are at least 50 years old.
Lenders can sell CHOICE-Renovation loans to Freddie Mac where the loan proceeds are used to pay for the renovations. If lenders deliver the loans after the renovations are complete, they can sell these loans to Freddie Mac without recourse. If lenders want to deliver the loans during the construction period, prior to completion of the renovations, they will be able to do so with recourse but must obtain prior approval from Freddie Mac.