How do I get a loan that would also cover renovations of my new home?

Question :

My wife and I have found a home that we'd like to place a bid on, but, it needs work and isn't liveable in current state. Both of our credits are excellent, we have good income levels as well and enough for as much as 15% down on the asking price. The market value is higher than the asking price. What our options for a loan that covers the mortgage and renovations?

Answer :

I presume 'fastrack' program avoids some of the typical closing costs of a standard Refi, but, without exact details, it's impossible for me to compare what they are offering you to what we currently have available.

I can tell you that, your scenario would likely receive a 4.625%. Although each lender would quote their own origination fee, our quote would be $2,834 (inclusive of all 800 section costs). Title and taxes would add another $1400 making the total closing costs about $4,200; which could definately be rolled into your no-cash-out refi.
By my calculations, the interest cost of $160,000 at 5.5% would cost you $8,800 for the 1st year. However, if you were at 4.625%, the interest cost would only be $7,400. I have a spreadsheet that I prepare for our clients to help them analyze the break even costs of refinances, let me know if you'd like a copy.
To summarize, if you compare the total costs of each loan over say 5 years, I think you'll see one of the loan options clearly in your favor.

Date: April 04