Tulsa Mortgages


Archive for July, 2015

Renovation Loans or Repair Escrows

We hope you are enjoying the full peak of summer!

On Sunday I finally noticed the honeysuckle growing on the side of the Broken Arrow Expressway, and also noticed that honeysuckle is a great metaphor for my childhood summers in Tulsa. The cooling treat on the path of every summer stroll. You pluck the petals in one smoothed motion, using the surgical precision required to plunge ALL of the juice. Then, it left you wanting more.

Sometimes our clients see great homes, but sometimes they still want more. This is why people love to buy real estate and why I love renovation deals.

Chronologically speaking, great renovation deals start in the listing presentation. And just like any deal, great renovation projects require abundant levels of “expectation management”.

Home kitchen before renovation


Thus, in the spirit of helping you sell more homes faster, we’ve included a list of questions and answers, so you can illustrate options that get your clients imagining. Have you found yourself in either of these situations?

The sellers want to sell a house “as is” and do not want to spend a single penny selling it. You know some repairs are going to need to be made. Position yourself as the authority and let them know what their future holds: their pool of buyer opportunities will be very shallow unless we handle X,Y and Z.

Or, is it the buyer we are consulting? They have identified a near perfect house, but it lacks something: kitchen isn’t up to par, the roof is worrisome, needs more insulation, or they wish it had a pool.

Home Kitchen Renovation


Here are some questions to keep in mind:

1. Could they escrow for it?

This is a great solution if the seller is willing to make the repairs and/or upgrades, but they want to be reimbursed at closing.

2.What about FHA buyer funded escrow holdback? 

Simply this, the buyer borrows for the sales price + holds extra funds aside for repairs after closing, and only pays one loan payment.

3.    Is a HUD REO program available? 

This may be available if the mortgage product is FHA and the appraiser requires minimum repairs under $5K

4.    Can we add it into the contract as a seller funded item? Even when it costs them nothing?

If they’re using a VA loan we can. The VA will allow repair escrows of up to 100% of improved value (sales comparison approach). Since it is a 100% loan, why not write the contract in an advantageous way.

5.     Would the repair be classified as an improvement to the homes efficiency?

Many mortgage products offer an EEM Feature (E.E.M. stands for energy efficient mortgage). These popular credits allow for the replacement of appliances, utility components, and sometimes even the windows and doors.

6.     Of course, there is always cash?

But when mortgage rates are so low and money markets are gaining, isn’t there always a better use for cash? Borrow low and invest high, right?

As you finish your summer, please remember the honeysuckle, and keep reaching for more!


Copyright 2015 John Regur All Rights Reserved – Originally Posted at: Tulsa Oklahoma Mortgages – John Regur

Posted in: Remodeling

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Renovation loans were on my mind this 4th of July


We hope you enjoyed a safe and invigorating Independence weekend!

Saturday night during the Riverside show a gentleman leaned toward me and dare-told me why I love fireworks so much.  The reason he said was they offer the ideal combination of fear and love.  We fear the boom.  We love the multi-colored lightening.  Wow, I said, and then I remembered how I just thought they looked cool.  And then he added:  all things become the most attractive when they appeal to our dreams and stimulate what we want.

And that is what I needed to hear.  The holiday recharge I needed.  That is what we want to provide on every real estate deal.

That is why people love to buy houses.

That is why I want to promote our renovation loans.  They make existing inventory more attractive – if we can show how these homes could become more attractive.  If we stimulate our buyer’s wants, we can then re-model a home in a way that appeals to them.



So, a short list for considering a renovation deal:

1.      Determine your client’s goals and inspiration.

More details = more accurate planning. Chances are they’ve already spent time on Pintrest and Houzz anyway, so this shouldn’t be too hard.  Get them organized into a folder, binder, whatever, but get organized.

Now we need to make sure the budget and the location of the house supports the value of the visual stimulus they have created.

2.      Gather bids & references.

Make sure you gather at least 3 renovation bids.  You have to know your numbers before you make an offer.  If I were reviewing an offer to contract on real estate, I would want to see the renovation figures to determine if the offer is realistic.

Check all references, and that should be at least 3 from each contractor.  This could be the most important step, where they will find the best way to reduce their overall risk for the money they will spend. The small amount of time it takes to check 3 references could save the time it takes to re-do a project.

(Search NARI online. The National Association of the Remodeling Industry has local chapters throughout the country and are an excellent source for qualified contractors in our area.)

With jumbo loan renovations (up to $150,000 in construction costs), you are going to need architectural plans.  We often see architect-prepared blueprints that are over-designed and not sensibly matched to the project’s budget. To avoid this, recommend that the architect prepare a conceptual sketch and that they confirm the design with his, her or your qualified remodeler.

3.      Confirm these changes with an appraiser.

So, your client wants to gut a perfectly good kitchen instead of adding a second bathroom? An appraiser will help you echo the same sentiments in “dollar amount” that you try to get across to them: how do we add “sales approach” value to this home?  

Consider getting your own square footage appraisal to confirm exact measurements.  You may need it to update the courthouse records.  A square footage appraisal can be had for as little as $100, and allows you to open a conversation with an appraiser.

4.      Coordinate financing.

Are your clients able to use cash for this renovation? Or, would they prefer to compound earnings in the money markets, and instead borrow the money at historically low mortgage rates.  Borrow low, invest high, right?

We offer renovation options with every loan type we do.  If renovations are small, we can simply escrow for a fast closing.  If the job is large, we do jumbo renovations up to  $1.5 million in loan amount.

Or – maybe they are considering a line of credit.  Renovation loans offer one time closings, lower overall fees to interest rates and higher loan to values in most comparisons.  And the borrower gets up to 30 years to re-pay, or as little as ten.

5.    Call me for clarification – then go shop.

At the end of the day, your client’s objective is usually more cosmetic than it is structural.  We have to step up our game and guide the process in a successful manner.

Similar to the fireworks this holiday, it is important to enjoy and participate in special things.







Copyright 2015 John Regur All Rights Reserved – Originally Posted at: Tulsa Oklahoma Mortgages – John Regur

Posted in: Remodeling

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