Freddie Mac now offers a new mortgage called CHOICEReno eXPress to enable homebuyers and homeowners to finance the cost of small-scale renovations with a single-close mortgage, saving time and money.
“CHOICEReno eXPress expands upon the Freddie Mac CHOICERenovation mortgages, which were designed to help address the nation’s aging housing supply, support the need for affordable housing, and offer renovation, repair, improvement, or refinance options to support the increasing demand for cost-effective financing solutions,” Danny Gardner, Freddie Mac single-family business senior vice president of client and community engagement, said in a release. “CHOICEReno eXPress will help homebuyers and homeowners reduce their out-of-pocket costs by offering more affordable loan terms than using credit cards or unsecured financing when making small-scale renovations.”
The CHOICEReno eXPress provides a streamlined, affordable financing option. Homebuyers can make renovations such as replacing doors and windows, roof repairs, minor remodeling, and interior or exterior painting.
Lenders can sell CHOICEReno eXPress mortgages to Freddie Mac so long as the loan proceeds are used to pay for renovations of up to 10 percent of the home’s as-completed value without requiring special lender pre-approval or lender recourse depending on the purchase price. In rural regions labeled as high needs, the loan can go up to up to 15 percent of the home’s as-completed value. A completed inspection is required to verify the planned renovations were in fact done, the company stated.
In addition to adding CHOICEReno eXPress, Freddie Mac also announced updated requirements to provide lenders greater flexibility when offering a CHOICERenovation mortgage and are designed to make these mortgages easier for lenders to implement and offer them to more borrowers.
The updates include allowing 100 percent of the cost of materials to be advanced and renovation costs to be paid directly to a home improvement store; the ability to use proceeds to pay off short-term financing for prior renovations of an existing home; and allowing a borrower to not occupy a primary residence while renovations are ongoing.
“Lenders with an interest in providing a renovation mortgage to their clients, but have limited experience in renovation and construction lending, will also find CHOICEReno eXPress is an attractive offering because of its streamlined operational requirements,” Gardner said.
The updates to requirements and the new CHOICEReno eXPress will be available for mortgages with settlement dates on and after Nov. 1, 2021.