Freddie Mac recently announced its new CHOICERenovation mortgage program that bundles both home purchase and home repairs with one set of closing costs. CHOICERenovation is, according to a spokesperson for Freddie Mac, meant to “…address the need for more efficient ways to finance home purchases and home improvements (under one umbrella) to remediate today’s aging housing stock.”
With CHOICERenovation, buyers can borrow the amount of money they need to buy the property and the cash they need, up to 75% of the property’s appraised value, to complete renovations on that home. According to Danny Gardner, senior vice president of Freddie Mac, “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…and provides borrowers with a coordinated cost saving option for financing renovations.”
This program can be used for primary residences, single-family homes, multi-family buildings of up to four units as long as one of those units is the owner’s primary residence, secondary homes and single-unit investment properties. Borrowers can choose to have fixed or adjustable interest rates with this program.
The CHOICERenovation program represents “…the convergence of several major real estate trends,” said Gardner. The program can be used to repair homes that have been damaged in natural disasters and/or to make those homes more resilient in the face of natural disasters. The rising number of multi-generational households can use this new mortgage program. And the program can be used for the exploding number of homes in need of remodeling and/or renovations.
“The renovation market has grown by 50% since the Great Recession ended in 2009,” according to Harvard University’s Joint Center on Housing Studies. The Joint Center on Housing Studies indicated that the market for home improvement and repairs in the US amounts to approximately $400B on an annual basis…as “nearly 80% of the nation’s 137M homes are at least 20 years old and nearly 40% of those homes are at least 50 years old.”