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With the Remodeling market size expected to touch a massive $269 billion by 2025, it was time for Freddie Mac to jump into the Renovation loan marketplace. Especially given that the Federal Housing Administration and Fannie Mae have this kind of loan in place for, what, years now.
Freddie Mac’s CHOICERenovation mortgage offers borrowers the opportunity to purchase a fixer-upper and get it remodeled with a single loan, thus cutting out the need for a cash-out refinance. Borrowers can also procure the loan for their existing homes for improving their properties. The CHOICERenovation product is already open to the borrowers.
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,” says Danny Gardner, Freddie Mac’s Senior Vice President, Single-Family Affordable Lending and Access to Credit.
This statement is attested by the stat that says major metro areas may see an average growth of 6.8% in remodeling spends. No question then that this mortgage product is among the needs of the hour and one that has enough space to prosper despite the presence of FHA 203(k) and Fannie Mae’s HomeStyle Renovation.
Also, when the costs of home improvement get clubbed with the cost of a home, buyers psychologically attain greater peace of mind, knowing that they have one and not two separate loans to pay. To further, the absence of cash-out refinances implies lower interest rates. As if this wasn’t bonus enough, provision for a small down payment lobs the deal right into the alley of buyers.
So who can benefit from the CHOICERenovation loan?
- The first home buyers seeking affordable housing.
- Senior citizens looking to customize their homes to meet the needs of aging (say an accident-proof staircase or more space on the ground floor).
- Multigenerational homes looking for a custom renovation suiting every member.
- Homeowners looking to strengthen their homes against future natural disasters (storm surge barrier)
- Homes seeking repair for damages endured during a natural calamity or otherwise (retrofitting foundation area).
Freddie Mac asserts that roughly 4/5th of 137 million American homes are more than two decades old and approximately 2/5th of them are at least 5 decades old. Add to this, the ever-increasing millennial count exploring affordable housing space.
“Given the increasing age of existing housing stock, a growing number of millennials and other first-time homebuyers looking for more affordable homebuying options, and the increase in retirees opting to age in place, the Freddie Mac CHOICERenovation mortgage is a flexible solution to finance or refinance these fixer-uppers,” further adds Gardner.
Coming right after the All For Home initiative and particularly in the National Homeownership Month, this product, from the looks of it, has the legs to carry the dreams of many homeowners. Kudos to Freddie Mac for further empowering America.