• CMG MORTGAGE, INC. NMLS #1820

Millennials Trading Starter Homes for Fixer Uppers

  • December 26, 2017

With the housing market facing limited inventory, the starter home bracket is hit especially hard.  As first-time home buyers enter the market, they find themselves competing for the same limited selection of starter homes.  In heated markets especially, home price appreciation is pushing some home buyers to the higher-end of their budget.  Renovation loans, like the FHA 203(k) loan, are growing in popularity because they allow home buyers to purchase previously overlooked homes and have the budget to complete necessary repairs or desired upgrades. 

A recent article in The Day, profiles a young Connecticut couple aged 29 and 30, that opted to use an FHA 203(k) loan to finance the purchase and renovation of a fixer-upper, rather than continue to compete in the overcrowded starter home market.  In the article they explained, “we’re looking at a lot of houses and we’re going into these places where they’re pretty much at the top of our budget and it doesn’t really let us do any renovations or changes, and we don’t really like what we’re looking at.”

Renovation loans are not new.  They became a common tool after the housing crisis, when buyers and real estate investors sought to repair foreclosed properties and are becoming popular again because of the limited inventory problem.  While home builder confidence is high, the construction industry has yet to outpace home buyer demand.  Millennials have transitioned into homeownership more slowly than previous generations because of student debt and other financial problems, and now that they are ready to buy, they are competing in a heated market.

A renovation loan is designed specifically to facilitate home repair or remodel on a newly purchased or existing home.  The FHA 203(k) loan is streamlined into one application, one approval process, one closing, and one mortgage payment.   Rather than using savings or credit cards with high interest rates to finance repairs, home buyers can obtain financing for the full value of the home plus any needed repairs or wanted upgrades. 

Before deciding on any type of mortgage financing it is best to consult a mortgage professional and discuss your specific situation. 

 

Sources: The Day, HUD.gov

Kimberly Allen
Branch Manager
NMLS # 431903
Branch NMLS # 1666986


Kimberly Allen

PHONE: (415) 324-1000
kimallen@cmgfi.com

APPLY NOW
CMG Image
© CMG Financial, All Rights Reserved. CMG Financial is a registered trade name of CMG Mortgage, Inc., NMLS ID #1820 in most, but not all states. CMG Mortgage, Inc. is an equal opportunity lender with corporate office located at 3160 Crow Canyon Road, Suite 400, San Ramon, CA 94583 888-264-4663. Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act No. 4150025; AK #AK1820; AZ #0903132; Colorado regulated by the Division of Real Estate; Georgia Residential Mortgage Licensee #15438; Illinois Residential Mortgage Licensee; Kansas Licensed Mortgage Company #MC.0001160; Massachusetts Mortgage Lender License #MC1820 and Mortgage Broker License #MC1820; Mississippi Licensed Mortgage Company Licensed by the Mississippi Department of Banking and Consumer Finance; Licensed by the New Hampshire Banking Department; Licensed by the NJ Department of Banking and Insurance; Licensed Mortgage Banker – NYS Department of Financial Services; Ohio Mortgage Broker Act Mortgage Banker Exemption #MBMB.850204.000; Licensed by the Oregon Division of Financial Regulation #ML-3000; Rhode Island Licensed Lender #20142986LL; and Licensed by the Virginia State Corporation Commission #MC-5521. CMG Mortgage, Inc. is licensed in all 50 states and the District of Columbia. Offer of credit is subject to credit approval. For information about our company, please visit us at www.cmgfi.com. To verify our complete list of state licenses, please visit www.cmgfi.com/corporate/licensing and NMLS Consumer Access (www.nmlsconsumeraccess.org).