MiMutual Mortgage Offers More Choices for Your Home Renovation

In September 2024, when the Federal Reserve announced its first interest rate cut in over four years, homebuyers and current homeowners applauded the news. However,  although mortgage rates have come down, affordability remains a concern, and the current housing market is still sluggish.

The high cost of purchasing a new home has kept many would-be homebuyers out of the market, and the lock-in effect has discouraged sellers from listing their homes, further shrinking an already limited housing supply.

Nonetheless, people need housing that works for them. Renovation loans can offer homeowners and house hunters a much-needed solution to the lack of available homes that are attractive in terms of price, condition, and design.

Benefits of Renovation Loans

In a competitive real estate market with limited inventory, finding a suitable home can be a challenge. Due to elevated housing costs, potential homebuyers have had less buying power than in the past. This has pushed more buyers to seek out fixer-uppers and encouraged homeowners to renovate instead of relocate. According to the recent Leading Indicator of Remodeling Activities (LIRA) report, published by the Harvard Joint Center for Housing Studies, homeowners spent $463 billion on renovations in the first quarter of 2024.

Renovating a home offers numerous benefits, including increased comfort, improved energy efficiency, and enhanced property value. Here are some key reasons why more people are choosing to renovate:

• Homes that need work usually have a lower purchase price.
• Renovating can build equity faster than buying a move-in ready home.
• For existing homeowners, selling a home involves significant costs, such as realtor fees and moving expenses, both of which can be avoided by renovating.
• It can be a more cost-effective way to live in a desired neighborhood.
• Homeowners can customize their space to their preferences.
• The renovation costs can be rolled into the purchase or refinance loan for one easy-to-manage monthly mortgage payment. This reduces the hassle of securing separate loans for each purpose.

Renovation Loan Options

Different loan programs are designed to accommodate varying scopes of work, eligibility requirements, and financial situations. Every renovation project is unique and having loan options allows borrowers to tailor their financing to meet specific needs and goals.

As renovation loan lending specialists, MiMutual Mortgage has always offered a variety of loan programs to suit just about any budget or financial situation. Now, borrowers have a new CHOICE when it comes to renovation loans! We recently expanded our renovation loan product line to include Fannie Mae’s CHOICERenovation loan program.

We offer:

FHA 203(k) Limited and Standard

Backed by the Federal Housing Administration (FHA), the 203(k) options may be ideal for borrowers needing the ease of FHA qualifying and a low 3.5% down payment. FHA 203(k) loans allow for safety and structural repairs, minor cosmetic upgrades and complete rehabilitation.

Fannie Mae HomeStyle
The HomeStyle loan offers flexibility for borrowers with good credit who want to take on larger, more customized renovations. This loan offers strong conventional financing and can be used to finance a variety of property types, including primary residence, investments, and second homes.

Freddie Mac CHOICERenovation Loan

Similar to Fannie Mae’s HomeStyle loan, this option is available for a variety of property types including owner-occupied 1-4 units, condominiums, planned unit development (PUDs), 1-unit second homes, and investment properties. Both minor and major renovations are allowed, including luxury upgrades like adding a pool or an outdoor living area.

Renovations Are Our Specialty

When embarking on a home remodel, it’s crucial to work with an experienced lender. Renovation loans involve unique steps such as estimating repair costs, working with contractors, and ensuring the property’s post-renovation value aligns with the loan terms. A lender experienced with renovation loans understands the intricacies of these processes and can guide borrowers through potential hurdles.

At MiMutual Mortgage, we are well-versed in managing the additional paperwork, coordinating inspections, and navigating loan requirements. We collaborate with contractors and appraisers, streamlining the entire renovation process to ensure the project stays on track and within budget. Additionally, with any of our renovation loan products, we allow borrowers to finance up to six months’ worth of mortgage payments if the home is uninhabitable during the construction phase.

We close a high number of these types of loans and have a dedicated renovation lending department to guide borrowers from application to post-closing. Our Loan Officers can offer invaluable advice on which renovation loan is best suited to a borrower’s financial situation and scale of their project. Our company was even featured on a segment of the show “Designing Spaces” airing on the Lifetime Network!

Ready to Renovate?

Home prices aren’t likely to fall significantly any time soon. In fact, according to a recent article published by U.S. News & World Report, from 2025 through 2029, home prices are “predicted to rise more gradually at a percentage point or so above the rate of inflation, for an estimated increase of about 17% from 2024 levels.”

Why delay homeownership or settle for a home that isn’t perfect? Renovation loans offer a solution for today’s housing market. By rolling the renovation costs into the mortgage, homeowners can create their ideal living space while also increasing the value of their investment.

Now, with even more renovation loan options available, MiMutual Mortgage has the financing you need – whether your project is as small as cosmetic upgrades or as large as completely rehabbing an uninhabitable home.

If you are ready to renovate, contact MiMutual Mortgage and let us help you bring your vision to life!