Debunking 8 Common Condo Mortgage Myths

Purchasing a condo is a significant decision that often comes with a host of myths and misconceptions. While condos can be an excellent choice for many buyers, these myths can lead to confusion and uncertainty. In this blog post, we aim to dispel common myths about condo purchases, helping you make an informed decision when considering this unique form of homeownership.

Myth 1: Condos Are Always Cheaper Than Houses

One of the most prevalent myths is that condos are inherently more affordable than houses. While it’s true that condos can offer a more budget-friendly entry point into homeownership, their price can vary significantly depending on factors such as location, size, and amenities. Some condos in prime urban areas can be as expensive, if not more so, than single-family homes in suburban neighborhoods.

Myth 2: Condos Are Just Like Apartments

Condos and apartments may seem similar because they both involve shared spaces and often have homeowner associations (HOAs). However, there’s a crucial distinction: condo units are owned by individuals, whereas apartment units are typically rented. When you buy a condo, you own the unit, and you may have more control over customization and maintenance compared to renting an apartment.

Myth 3: Condo Living Is Only for Seniors or Singles

Condos are not exclusively for seniors or singles. They cater to a diverse range of homeowners, including families, young professionals, and retirees. Condo communities often offer amenities and services that appeal to a wide demographic, making them suitable for various lifestyles and life stages.

Myth 4: Condo Owners Have No Say in Community Decisions

Many prospective condo buyers worry that they’ll have no say in the decisions affecting their community. While there are HOAs that establish rules and guidelines, condo owners typically have a voice in shaping these rules through community meetings and elections. It’s essential to understand the HOA’s structure and how decisions are made before purchasing.

Myth 5: Condos Are Maintenance-Free

Condos do offer some maintenance benefits, as common areas are often taken care of by the HOA. However, this doesn’t mean you’re entirely free from maintenance responsibilities. Condo owners are usually responsible for the maintenance of their individual units. It’s crucial to review the HOA’s policies to understand what maintenance tasks are covered and what falls under your responsibility.

Myth 6: Condos Don’t Appreciate in Value

The appreciation of condo values can vary based on factors like location and market conditions, but it’s a misconception that condos don’t appreciate. Well-maintained and strategically located condos can indeed appreciate over time. It’s essential to research the local real estate market and the condo’s history before making a purchase.

Myth 7: Condo Fees Are a Waste of Money

Condo fees are often viewed negatively, but they serve a valuable purpose. These fees cover common area maintenance, amenities, insurance, and more, ensuring that the property remains well-maintained and functioning smoothly. Consider condo fees as an investment in the quality of your living environment.

Myth 8: Condos Offer Limited Privacy

While condos involve shared spaces and neighbors in close proximity, privacy can still be maintained. Many condo units are designed to maximize privacy with features like soundproofing, private balconies, and well-placed windows. Additionally, condo communities often have rules in place to respect residents’ privacy.

Dispelling these common myths about condo purchases can help you make a more informed decision when considering this form of homeownership. Condos offer a unique blend of convenience, amenities, and community living that can be an excellent fit for a wide range of individuals and families. By understanding the reality behind these myths, you can approach condo shopping with clarity and confidence. Are you looking to buy a condo? Reach out to one of our qualified loan officers today!

Mastering Home Purchases: The Ultimate Guide to Escrow Holdbacks for Repairs

Purchasing a home can be an exhilarating experience, but it can also come with its fair share of challenges, especially when it comes to addressing repairs and improvements. One powerful tool that can help streamline this process is the escrow holdback for repairs. In this comprehensive guide, we’ll dive into what an escrow holdback is, how it works, and why it can be a game-changer in the world of real estate.

Understanding the Basics

An escrow holdback for repairs is a financial arrangement where a portion of the homebuyer’s funds is withheld by the lender or escrow agent until specific repairs or improvements are completed. This arrangement is typically used when there are issues with the property that need attention before the sale can close.

When Is an Escrow Holdback Needed?

There are various situations where an escrow holdback may be necessary:

Repairs Identified During Inspection: If the home inspection uncovers issues that need immediate attention, an escrow holdback can provide a solution. It allows the sale to proceed while ensuring that repairs are completed post-closing.

Incomplete Construction: For newly constructed homes that aren’t fully finished, an escrow holdback can be used to ensure that agreed-upon construction or finishing work is carried out as intended.

Insurance Claims: In cases where damage is discovered after the contract is signed, an escrow holdback can help manage the repair process, ensuring that the property is restored to its proper condition.

How Does It Work?

Here’s a step-by-step breakdown of how an escrow holdback for repairs typically works:

Identification of Repairs: The appraiser, buyer, and seller, often with input from a home inspector or contractor, identify the necessary repairs or improvements.

Agreement on Costs: The parties agree on the estimated cost of the repairs and how much money will be held in escrow to cover these expenses. The standard holdback amount is 150% of the estimated cost.

Escrow Account Setup: The agreed-upon funds are placed in an escrow account, which is typically managed by the closing agent or title company.

Closing and Funding: The sale proceeds as usual, with the funds for the repairs held in escrow rather than being disbursed to the seller.

Repair Timeline: A timeline is established for completing the repairs. This can vary but is often within 30 to 90 days after closing.

Inspection and Verification: After the repairs are completed, a final inspection is conducted to ensure that the work was done to the agreed-upon standards.

Disbursement: Once the repairs are verified, the funds held in escrow are released to cover the repair costs.

Benefits of Escrow Holdbacks

Smooth Transactions: Escrow holdbacks allow transactions to move forward, even when repairs are needed. This benefits both buyers and sellers.

Peace of Mind: Buyers can proceed with the purchase knowing that necessary repairs will be addressed, and sellers can close the sale without delay.

Financial Protection: An escrow holdback protects the buyer by ensuring that the funds for repairs are available, reducing the risk of disputes or unexpected expenses.

Considerations and Caveats

While escrow holdbacks are powerful tools, there are some important considerations:

Clear Agreements: It’s crucial to have a clear and detailed agreement outlining the repairs, costs, and timeline.

Contractor Selection: Choosing a reputable contractor is essential to ensure that repairs are completed satisfactorily.

Proper Documentation: Keep thorough records of the repair process, including invoices, receipts, and inspection reports.

In conclusion, escrow holdbacks for repairs can be a valuable solution in real estate transactions, providing a structured way to address necessary repairs while keeping the sale on track. When used wisely and with proper planning, escrow holdbacks benefit both buyers and sellers, making the home buying process smoother and more manageable.

Ready to take the next step? Contact us today for expert guidance and a seamless experience.

*Escrow Holdbacks are subject to approval

Navigating the Path to Homeownership as an Educator

Teaching is a profession that shapes the future, one student at a time. It’s a calling driven by passion, dedication, and a deep commitment to education. However, for many educators, the dream of homeownership can sometimes seem like an elusive goal due to financial challenges. In this blog post, we will guide you through the journey of buying a home as an educator, sharing insights and tips that can turn your dream of homeownership into a reality.

The Quest Begins: Searching for the Perfect Space

Finding the right home is akin to solving complex equations. It starts with a vision, a dream of a place where you can unwind, recharge, and call your own.

Here’s how to begin your journey:

Define Your Vision: Before you start searching for homes, take some time to define your vision. What kind of home are you looking for? What neighborhoods align with your lifestyle and budget? Create a wish list to guide your search.

Budget Realistically: Teaching is a noble profession, but it often comes with financial constraints. Calculate your budget realistically, factoring in your income, expenses, and potential future changes. This will help you determine your home-buying capacity.

Research Mortgage Options: Explore various mortgage options, especially those tailored to educators or first-time homebuyers. Understanding the terms, interest rates, and down payment requirements is crucial to making an informed decision.

Grants and Assistance Programs: Many regions offer grants and assistance programs specifically for educators. These programs can provide down payment assistance or reduced interest rates, making homeownership more attainable.

One of our own programs we offer is the First Home Heroes program. This initiative reduces some of the out-of-pocket closing costs associated with the loan application process. This reduction is made possible by eliminating certain fees during the lending process. Eligible borrowers will have their application, underwriting, and processing fees credited back to them at the time of closing, up to a maximum of $1,585.

Budgeting Like a Pro: Budgeting becomes your superpower on this journey. Track your spending, cut unnecessary expenses, and save diligently. Every dollar saved is a step closer to your dream home.

Our Sanctuary: Finding the Perfect Home

After months of dedicated effort, you’ll discover your sanctuary. Your home won’t just be bricks and mortar; it will be where you continue to grow, create, and inspire. Each room will tell a story, and every corner will hold memories of your journey.

Gratitude to Our Supporters

In the classroom, teaching can be a solitary profession, but beyond those walls, it’s a collaborative effort. Take a moment to express gratitude to your family, friends, and mentors who offer unwavering support and guidance throughout this journey.

Owning a home as an educator is not just a dream; it’s a tangible goal within your reach. By defining your vision, budgeting wisely, exploring financial assistance options, and leaning on your support network, you can turn the dream of homeownership into a reality. Your path may have its challenges, but with determination and the right knowledge, you can unlock the door to your dream home. So, fellow educators, are you ready to begin this exciting journey towards homeownership? Your dream home awaits! Let’s embark on this exciting journey together, educators! Reach out to one of our loan officers today.

Budgeting for Success: How to Manage Finances and Save for Your Dream Home

Whether you’ve been browsing dream homes on Zillow for months or you’re just taking your first steps into the housing market, you’ve probably come to the same realization: buying a house is a big investment. In today’s fast-paced and often competitive real estate environment, it’s more important than ever to be strategic in your homebuying plan.

One of the best ways to accomplish this is by setting a budget. Managing your finances and saving effectively can make all the difference in how much house you can afford, and how you go about making your offer. In this article, we’ll explore the basics of budgeting and share some tips to help you save for your dream home.

Understanding the Power of Budgeting

Yes, budgeting deals with tracking your expenses – but it’s also much more than just that. Budgeting is a strategic approach to money management that can help you make progress toward your goals while staying on top of your financial responsibilities.

Maybe you consider yourself good with money, or maybe you struggle with managing your finances. Either way, setting up and maintaining a budget can provide many benefits, including clarifying your personal and financial goals, minimizing bad spending habits, encouraging responsible savings practices, and more.

Building Your Budget

Finding your dream home is one thing – figuring out how to pay for it is another. If you’re not sure how to get started with your savings budget, we’ve got you covered.

  • Track

The first step for any effective budget is getting visibility into your finances. That means assessing your current income, expenses, and debts. Over the course of a few months (the longer, the better!) track all your income, expenses, and debts.

  • Categorize

Divide your expenses into fixed (rent, utilities, loan payments) and variable (dining out, entertainment, gifts). Then, prioritize according to what’s essential and what can be cut down. It’s not easy, but even something as simple as canceling a few subscription services or stepping up your meal prep game can add up to big savings in the long run.

  • Set Goals
    Determine how much you need to save by making an honest estimate of your expected costs. While the down payment is often the biggest savings consideration for prospective homebuyers , remember that a house is a long term investment that carries risk and responsibilities. Don’t neglect to account for closing costs, property taxes, homeowners insurance, the cost of utilities, move-in expenses and repairs.

Budgeting Tips

With your budget in place, the next step is sticking to it. Sounds simple, but like most things, it takes practice and effort to get the best results. Here are a few tips to help you on your way.

  • Create a Designated Account

Open a separate savings account specific to your goals. This helps prevent accidental spending and allows you to see your progress over time, which can be a great motivator. Shop around for a good interest rate – you’ll feel better stashing your money in an account when you know it’s returning some interest!

  • Automate Savings

Set up automatic transfers into this savings account on a regular basis. Putting more money into your savings can help cut down on the temptation to spend more and can also ease the psychological sting that sometimes comes with setting money aside for the long term. One note of caution – be sure that any automatic deposits are sustainable. The last thing you want is to overdraft your account or miss a payment due to over-ambitious saving!

  • Review and Revise

No budget is perfect, and household finances can change over time. A good budget has some built-in flexibility and should be reevaluated periodically.

Got a raise that’s bringing in extra cash? Great – factor it into the budget to avoid spending it impulsively. Likewise, if you’ve encountered unexpected expenses or cost of living increases, update your budget to ensure you’re still meeting your financial commitments first and foremost.


Budgeting for Your Dream Home

Budgeting can feel restrictive, but a good budget is an empowering tool for financial freedom. By creating a detailed budget, setting achievable goals, and practicing good spending and savings habits, you’ll be well on your way to saving for that dream home.

To further explore your financial options and learn more about your mortgage options for buying your dream home, reach out to our experienced loan officers. We’re here to help you achieve your homeownership goals.

New Office, New Leader, New State!

More exciting news about our ongoing growth and expansion efforts: First Home Mortgage is opening a new office location in Sevierville, Tennessee! That’s right – following closely on the recent announcement of our latest branch expansion in Crofton, we’re opening up a new chapter in a new state, bringing our total count to 33 offices in 21 states!

Just as with our previous office openings, we knew we’d need the right person to put together a talented team and lead our operations before we could open our doors. We’re proud to introduce Brad Guinn, a recent addition to the First Home leadership team who will serve as the Sevierville branch manager.

“I am deeply honored to lead a dynamic team and contribute to the thriving East Tennessee housing market,” Brad said. “With a strong local presence, I am dedicated to providing unparalleled service and expert guidance to the residents of Sevierville and beyond.”

Brad has 30 years of experience in mortgage and financial services, including accounting, finance, and higher education. His comprehensive experience encompasses leadership roles, specialization in construction financing, and financial planning. His insightful approach and passion for leading and teaching has earned him a reputation as a trusted advisor within the industry.

Brad is also a family man and a proud, active member of the community. Outside of work, he dedicates some of his free time to leading a local youth athletic program that he and his wife founded, and supporting his two sons in playing various sports. Additionally, he teaches corporate finance at local university campuses as an adjunct professor.

Matt Nader, our Senior Vice President and Director of Sales, shared his enthusiasm for Brad’s leadership and our new office opening.

“Brad’s financial expertise and community-oriented approach perfectly position him as a strong fit and valuable addition to the First Home team,” Matt said. “We welcome Brad as the leader of our inaugural office in the state of Tennessee and eagerly anticipate the positive impact he and his team will make in Sevierville and the surrounding area.”

Through the launch of our Sevierville branch, we mark an important milestone, entering Tennessee to extend our mission of making homeownership attainable by all.

“We’re entering a new era of growth and potential with the launch of this office,” Nader added. “Brad and his team will lead us in offering new pathways to homeownership for the people of Tennessee.”

With the help of Brad and his team, we are looking forward to making Sevierville and its surrounding areas a thriving hub of homeownership opportunities!

Safeguarding Your Home: A Comprehensive Guide to Emergency Preparedness

As we navigate through hurricane season and witness recent incidents like the Maui fires, the importance of emergency preparedness cannot be understated. Your home is more than just a physical structure it’s your sanctuary. In this blog, we’ll delve into practical steps to safeguard your home and loved ones during emergencies.

Risk Assessment: Start by identifying the potential risks in your area. Research the types of emergencies that are most likely to occur, such as hurricanes, floods, wildfires, or earthquakes. Understanding these risks will help you tailor your preparations accordingly.

Develop a Family Emergency Plan: Gather your family to create a clear and comprehensive emergency plan. Outline evacuation routes, designate meeting points, and discuss communication protocols. Ensure everyone understands their roles and responsibilities during an emergency.

Assemble a Customized Emergency Kit: A well-thought-out emergency kit is essential. Customize it based on your family’s needs and potential risks. Include non-perishable food, water, a first aid kit, medications, personal hygiene items, a flashlight, batteries, a multi-tool, and any special items for infants, elderly family members, or pets.

Strengthen Your Home’s Defenses: Fortify your home against potential threats. Reinforce windows and doors, secure loose objects in the yard, and consider installing storm shutters or fire-resistant roofing materials. Regularly inspect and maintain your home’s structural integrity.

Safeguard Important Documents Digitally: While physical copies are important, digitize crucial documents and store them securely in cloud storage. This ensures that even if your physical copies are lost, you can access vital information from anywhere with an internet connection. This includes having copies of logins and passwords if you do not have them memorized.

Review and Update Insurance Coverage: Regularly review your homeowner’s insurance policy to confirm it covers various types of disasters. Depending on your location, consider additional coverage for flood, earthquake, or wildfire damage. Keep a copy of your policy in your emergency kit.

Stay Informed: Stay connected to local news and weather updates. Utilize smartphone apps, weather radios, and community alert systems to receive timely information about impending emergencies.

Practice Regular Drills: Hold emergency drills with your family to ensure everyone knows what to do in different scenarios. Practicing evacuations, using emergency equipment, and communication procedures can make a significant difference during a real emergency.

Create a Communication Tree: Establish a network of neighbors, friends, and family members who can support each other during emergencies. Share contact information and check in on each other’s well-being when disaster strikes.

Foster Resilience and Adaptability: Prepare mentally for emergencies by discussing potential scenarios with your family. Foster a sense of resilience and adaptability, knowing that being prepared can make a challenging situation more manageable.

Emergency preparedness is a responsibility that empowers you to protect your home and loved ones during unforeseen events. By customizing your approach, developing a clear plan, and investing time in proactive measures, you can significantly reduce risks and navigate emergencies with confidence. Remember, a little preparation today can go a long way in securing your tomorrow.  


First Home Mortgage’s Crofton Branch Is Expanding

At First Home Mortgage, we know that the key to our success is the cumulative talent, effort, and dedication of our incredible teams, and that’s why we’re always seeking new opportunities to grow our talent pool. Today, we are excited to announce that our Crofton office is growing with the addition of new members of the First Home team, as well as two new leaders, Branch Managers Scott Bienstock and Michael Grossblatt!

Scott Bienstock

Scott brings over 15 years of real estate and mortgage experience to his role as Branch Manager of the Crofton office. As a former licensed real estate agent, he has a valuable perspective of the industry and unique insights into the entire homebuying and mortgage process. Scott specializes in purchases, first-time homebuyers, FHA 203k, investment properties, USDA, VA, VA rehab and conventional rehab loans.

“First Home Mortgage’s commitment to excellence and client-focused philosophy made accepting this new position an easy decision,” said Scott. “I am excited to be part of this incredible team of passionate, talented mortgage professionals serving the Crofton community.”

Michael Grossblatt

With more than two decades of experience in the mortgage industry, Michael Grossblatt brings a wide range of mortgage origination expertise and financing industry knowledge to his new role as Branch Manager. Michael is passionate about community service and is active in supporting a variety of local organizations and nonprofits. He is enthusiastic about helping his clients build wealth and accomplish their goals through homeownership.

“In the real estate and mortgage business, building and nurturing relationships within your community is the key to success,” said Michael. “As a member of the First Home Mortgage team I look forward to taking a community-first approach to helping my clients and neighbors achieve their homeownership dreams.”

A Shared Vision for Success

Scott and Michael share a common goal for the Crofton branch – to continue building on the vibrant and supportive culture where clients feel valued and supported throughout their homeownership journey. With the help of the other new members of the team, they will continue raising the bar for home financing even higher.

Welcome aboard, Scott and Michael!

Embracing the Last Days of Summer: Maximize Your Garden and Backyard

As the end of summer approaches, it’s the perfect time to soak in the last warm rays of sunshine and make the most of your garden and backyard. Whether you’re an avid gardener or simply love spending time outdoors, there are plenty of ways to enhance your outdoor space and create unforgettable memories. In this blog, we’ll explore tips on how to take advantage of your backyard before the sun sets on the summer season.

Revive Your Garden with Late-Blooming Flowers

As summer transitions into autumn, there are still plenty of vibrant flowers that can add a burst of color to your garden. Plant late-blooming varieties such as dahlias, chrysanthemums, and asters to keep your garden looking lively and beautiful well into the fall season. Don’t forget to water and fertilize your plants regularly to ensure they thrive during these final warm days.

Create an Outdoor Dining Space

Take advantage of the pleasant weather by creating an inviting outdoor dining area. Whether you have a patio, deck, or spacious backyard, consider investing in comfortable outdoor furniture and a dining set. Host a delightful end-of-summer dinner party or enjoy a cozy family barbecue with your loved ones amidst the natural beauty of your garden.

Install Outdoor Lighting

Extend your enjoyment of the garden and backyard into the evening hours by installing outdoor lighting. String lights, solar-powered lanterns, and LED garden spotlights can create a magical ambiance, making your outdoor space perfect for relaxing, reading, or stargazing. Well-placed lighting also enhances safety and allows you to navigate your garden with ease during the night. This can be a great transition to help utilize your outdoor space even into the fall months!

Start a Late-Summer Vegetable Garden

Even as summer comes to a close, you can still grow some vegetables and herbs to enjoy during the autumn months. Consider planting cool-season crops like kale, spinach, lettuce, and radishes. With proper care and protection from colder temperatures, these plants will yield a fresh and nutritious harvest well into fall.

As the end of summer approaches, your garden and backyard offer a wonderful opportunity to make lasting memories with family and friends. So, seize the moment and maximize your garden and backyard to savor the last days of summer!

Understanding Your Mortgage Options: Fixed-Rate and Adjustable-Rate Mortgages

As a prospective homebuyer in today’s market, it’s important to have awareness of the different types of mortgages available in order to determine which is right for you. One particularly important distinction to understand is the difference between fixed-rate mortgages and adjustable-rate mortgages (ARMs).

In this article, we’ll explore both of these mortgage options and evaluate the benefits and limitations of each.


Fixed-Rate Mortgages

A fixed-rate mortgage is a loan with an interest rate that remains constant (or fixed) throughout the entire life of the loan. That means whether you’re in the first year or the final year of your mortgage, you’re paying the same percentage in interest on the borrowed money. For this reason, fixed-rate mortgages are more predictable and therefore easier to budget around.

Because your lender is setting the rate for the long term, the trade-off for this predictability is an initial rate that is typically higher than that of an ARM.


  • Consistency: With a fixed-rate mortgage, your interest rate and monthly payment remain the same for the life of the loan, making it easier to anticipate monthly payments years down the road.
  • Protection from volatility: Regardless of market fluctuations, your interest rate will never change, shielding you from potential rate hikes.


  • Higher initial rate: Fixed-rate mortgages generally have higher interest rates initially compared to ARMs, which could affect your purchasing power and the overall cost of your home over time.


Adjustable-Rate Mortgages

Unlike a fixed-rate mortgage, an adjustable-rate mortgage is a loan with an interest rate that adjusts periodically according to market conditions. Generally, it begins with an introductory period (typically a few years) in which the rate is somewhat lower than that of a comparable fixed-rate mortgage. Once the loan reaches its adjustment period, that rate can be adjusted based on the current rate environment, resulting in a potential increase to your rate and therefore a higher monthly mortgage payment. This makes ARMs inherently more risky – especially over the long term.


  • Lower initial rates: ARMs often start with lower interest rates, providing lower initial monthly payments and potentially higher purchasing power.
  • Potential for savings: If interest rates decline, the rate adjustment feature of ARMs may result in lower monthly payments and long-term savings – although it’s important to note that this is not guaranteed.


  • Uncertainty: The main drawback of ARMs is the uncertainty of future interest rate adjustments. Since your rate is not permanently locked in, your monthly payments could increase significantly once adjusted.
  • May carry a prepayment penalty: If you decide you want to pay off your mortgage before the end of the loan term, you may be faced with a prepayment penalty (also known as an early payoff fee).


How to Tell Which Type of Mortgage is Right for You

Fixed-rate mortgages are traditionally more popular with the majority of buyers, especially those who plan to own their home for longer, thanks to their simpler nature and more predictable long term pricing.

However, depending on market conditions, and in the case of buyers looking to own their home for shorter time periods, ARMs can be an attractive alternative.The popularity of ARMs tends to fluctuate alongside changes in interest rates. That’s why, for example, as of April 2023, ARMs accounted for 18.6% of the dollar volume of conventional single-family mortgage originations, quadrupling from their January 2021 low.

Choosing the right mortgage type requires careful consideration of your financial situation and long-term goals. Here are some steps to help you decide:

  • Assess your financial status and risk tolerance to determine if you are comfortable with potential payment changes and if your budget can accommodate fluctuating rates.
  • Evaluate your future plans to estimate how long you plan to own the home and if any major life changes could affect your mortgage.
  • Consult with a loan officer to compare loan types, current rates, and mortgage programs that will help determine the best mortgage option for your needs.

Both options have their strengths and weaknesses, and the choice ultimately depends on your financial situation, risk tolerance, and long-term plans. By consulting with a loan officer and considering your unique circumstances, you can make an informed decision that aligns with your homeownership goals.

Crafting Your Dream Home: A Guide to Construction and Renovation Financing

When faced with a competitive housing market and limited inventory to go around, it’s not uncommon for many buyers to feel like their options are extremely limited. After all, finding the perfect home that fits your budget, your current needs, and your plans for the future is no small task, even in the best buyer’s markets.

If you’re in a similar situation, or if you already own a home that you’d like to improve (like the 55% of homeowners who renovated in 2021, according to one study), you may want to consider two often overlooked loan options: construction loans and renovation loans.

Unlike the conventional, long-term mortgages that typically come to mind when thinking about home loans, construction and renovation loans (renovation loans are typically 30-year fixed loans) are specialized options for building or renovating a home that could be just the right move for a buyer who’s feeling limited by what the current market has to offer.

Construction Loans: Building Your Dream Home

If you have your sights set on building a new home from scratch, construction loans can provide the investment capital you need to get the job done – including purchasing land, materials, labor, and more. These short-term loans are specifically designed to finance the construction of a new property. Typically, construction loans have a term of one year, and upon completion of the home, the borrower must secure a permanent home loan.

With a construction loan, you have the flexibility to shape your ideal living space according to your preferences and requirements. Working with First Home Mortgage means you can explore the right construction loan for you and then take out a mortgage with a lender you’ve already built a relationship with.

Renovation Loans: Transforming Your Existing Home

Maybe you’ve got an older home that’s due for some updates, or maybe you’ve found one to buy that would be just right if you could add that second bathroom, finished basement, or any of the most popular home improvement projects. Well, a renovation loan might be right for you.

Home renovations are popular and often expensive. According to the Joint Center for Housing Centers of Harvard University (JCHS), spending for home improvement projects increased from $328 billion in 2019 to $472 billion in 2022. It’s expected to climb even higher in 2023, due largely to inflation and supply chain shortages.

Renovation loans provide the necessary financial support for home repairs, renovations, and remodels. There are several options available for renovation loans, including FHA 203(k), FNMA HomeStyle®, and Freddie Mac CHOICERenovation® mortgages.

FHA 203(k) loans, offered by the Federal Housing Administration, enable borrowers to finance repairs within a single mortgage on their primary residence. These loans require a minimum down payment of 3.5% on a purchase and come in two types: Standard FHA 203(k) loans, which allow borrowers to finance rehabilitation costs starting at $5,000 without a maximum limit, and Limited FHA 203(k) loans, which provide renovation and repair financing for up to $35,000 in total renovation costs.

Alternatively, Fannie Mae HomeStyle® and Freddie Mac CHOICERenovation® mortgages,   empower you to purchase and renovate a primary residence, second home, or investment property. These loans require a minimum down payment of 3% or more, where applicable, and allow you to combine the cost of purchase and renovation into a single mortgage, up to the conforming loan limit for the county/district.

That’s a lot of numbers and acronyms, but the main takeaway is that you may have some options to consider. As always, consulting with an experienced loan officer can help you get a better understanding of what’s available for your unique circumstances.

Determining if a Construction or Renovation Loan is Right for You

If you’re considering building a home, evaluate whether your current financial situation favors building over buying. Assess your timeline for moving into a new home and factor in any time constraints, potential for delays, unexpected costs, and your overall level of comfort with taking on a major undertaking like this.

If you’re contemplating renovations, assess whether it’s the right time to proceed and if the renovations will significantly enhance your quality of life and the value of your home. There are many variables that impact the overall cost, and they should be carefully weighed against your short-term and long-term goals.

Obtaining a Construction or Renovation Loan

Once you’ve decided to pursue a construction or renovation loan, it’s essential to evaluate your current financial standing. Start by assessing your credit score, debt-to-income ratio, and overall financial health.

For both construction and renovation loans, obtaining pre-qualification is key. It provides a solid estimate of your borrowing capacity and helps you establish a realistic budget, enabling you to plan your project effectively. If you’re not already pre-qualified, you might be surprised to find how quick and easy it is – and without any impact on your credit score*.

If you’re ready to explore the construction and renovation loan options available at First Home Mortgage, connect with one of our loan officers today and start your search for the loan that will help you build or remodel your dream home.

HomeStyle® is a registered trademark of Fannie Mae. CHOICERenovation® is a registered trademark of Freddie Mac. *A soft pull will not affect your credit score however if you decide to proceed with a full mortgage loan application, a full credit report will be ordered.

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