As homes age, more homeowners are looking to remodeling to spruce up their properties. Of the nation’s stock of 137 million units, nearly 80% are at least 20 years old, and 40% are at least 50 years old.
Freddie Mac says its new mortgage product is to help home buyers finance or refinance fixer-uppers. Eligible buyers will be able to finance the purchase of their home and the cost of renovations into a single-close mortgage.
“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 home buyers,” says Danny Gardner, Freddie Mac’s senior vice president of single-family affordable lending and access to credit. “The ‘ChoiceRenovation’ solution gives borrowers the opportunity to make improvements, renovations, and upgrades to a home using a purchase or no cash-out refinance loan that will be eligible for sale to Freddie Mac. This provides the borrower with a convenient cost saving option for financing renovations.”
Borrowers can also use the ChoiceRenovation mortgage to renovate and repair a property that has been damaged in a natural disaster or for renovations that will help the borrower prevent damage from a future disaster, such as storm surge barriers, foundation retrofitting, or retaining walls.
Remodeling projects have been growing. BuildFax reported this week that markets like Los Angeles, Miami, Philadelphia, Chicago, and Washington, D.C., are seeing some of the most significant increases in remodeling activity.
Gardner says Freddie Mac is launching the new mortgage to offer more flexible financing options in responding to “the increasing age of existing housing stock, the growing number of millennial and other first-time home buyers looking for more affordable home buying options, and the increase in retirees opting to age in place.”