Since this blog is a resource for construction companies to build a better company which builds a better brand, I have asked a few very special and talented professionals to contribute to the resources available to you as a company, but also in a way that you can share with your clients–making you the ‘go-to-resource’ they are looking for!
Jim is one of those professionals that I have asked to contribute. As the most patient, trustworthy, and knowledgable mortgage broker I have ever met, I felt his contribution would be a vital asset. Use his words to help you discuss with your clients about the finacial aspect of their project.
So you’re thinking your home needs some work.
Whether it’s a redo of the oh so fashionably out of date 50’s kitchen that looks like June Cleaver would be coming home any minute to start the pot roast, or a simple sun porch out the back with a built in grill to show off to your buddies, home improvements are exciting and nerve racking at the same time.
The first question you have to ask yourselves, is how crazy are we going to go? A budget defines the plan. Of course, with every budget comes the reality that budgets were meant to be broken somewhat. Figure your project’s costs, then add at least 10% to cover the fact that material costs go up during the work, contractors find hidden problems they hadn’t seen and the biggie; your “Change Orders.”
A Change Order is when the client begins to see their project in the middle of the process and realizes, “Oh bugger, we are going to need a bigger grill!” or “I really think the doors to the outside should be over there where the sun sets instead of over here by the neighbors.” Contractors and/or architects are more than willing to make changes or modifications to your plans, but be prepared to pay for them.
So you now know how much you can spend, but where’s the money coming from? For many people, they are going to look to borrow the money. This is where a good lender comes in. As there are many different projects and renovations, a good lender will help you decide which type of financing would be best to pursue. How much are you looking to borrow? How long will you plan to pay it back? What are values of homes in your area doing? What is your credit like? How much will the new work add to the value of your home after it is all done? How long are you going to stay in the home after repairs are completed? What offers are available locally and nationally that make the best sense for you? These are the types of questions a good lender should be asking you before quoting you anything. Any schmeil can put you in a home equity loan or refinance your home, but what product matches your needs best.
To find a good lender, here is your homework:
- Talk/Facebook/Skype/Tweet with family and friends to see if anyone you know has recently gone through a project similar to yours and what advice they can give. No matter what I tell you, you will still take the advice of friends and family over some shmoe in an article.
- Talk with the contractors you are considering using, but be aware, they may have a brother, friend, bookie they owe, who is in the business and are not going to give you the best option always.
- Look for someone who knows renovation lending. Ask around and be brave. Ask how many renovation loans they have done in the last 6 months. Ask if they have FHA 203(k) financing (it’s a tool lenders can use for renovation financing, but it is not well promoted). Ask when the last renovation loan they did was. More importantly, ask for referrals. If they have done a renovation loan recently, ask to speak to the client if possible.
- Finally, go to the trade associations for advice. There are builder’s trade associations in nearly every community. In many of them, lenders ware members or associate members. They work with the trades and usually are very comfortable with renovation and new construction lending.
Jim Martin has been working in the mortgage industry for over 20 years helping people to solve their financing concerns. Mortgages are his career and avocation. He has chosen to demonstrate his commitment to his career by obtaining two professional designations that less than 100 people in the country have. As a Certified Mortgage Consultant and a Certified Residential Mortgage Specialist, he has had to take classes, commit himself to service in the industry and pass two rigorous tests to provide better service to his customers. Learn more about Jim.