“With a large percentage of either foreclosed properties or properties that are put to market in less-than-perfect condition, a lot of borrowers are leveraging the ability to purchase that property, put a little bit of effort into improving that property, and ultimately, three or six months down the road, really have the equity to show for it,” said Shaun Hamman, executive vice president of wholesale and correspondent sales at American Financial Resources. “We try to simplify that process and make it as easy as possible, because just the idea of purchasing a home and uprooting your family is challenging enough without adding the complexity of contractors and things. We look to really remove that burden from our clients.”
AFR handles many of the details borrowers often have to worry about themselves, Hamman said.
“We handle the complete disbursement process. We make sure that the client and the contractor have performed a level of work that is satisfactory to the borrower,” he said. “As opposed to someone taking that challenge on themselves, we work as a fantastic intermediary.”
And that means one less thing for a harried new homeowner to worry about.
“Typically, on most larger renovations, you have a third party who’s paying upon completion of the project,” Hamman said. “This way, not only is the contractor happy – he knows the money’s held in escrow and he’s going to receive payment for the work he performs – but at the same time the client is happy, because he knows that the work is being performed, and someone is coming in and making sure they hit those milestones prior to completion. We do take a lot of that burden, as opposed to you acting as your own general contractor. It makes the overall experience much more pleasurable.”
But that’s not the only thing AFR does to take the worry out of renovation loans. The company is also serious about education – for both originators and homeowners.
“We are seeing a tremendous need for the product,” Hamman said. “We’re the number-one BTO renovation lender in the country, so we’re viewed as the expert in the renovation loan field for BTO originators. We offer webinars, training. We’ve really seen individuals grow and prosper through the use of the services we offer. … There’s always opportunity to understand and know the process. Having the consumers ask questions, and at the same time having well-educated originators, ultimately creates a better overall culture for renovation loans.
“We’re looking to continue to expand the marketplace and expand the knowledge of the people selling it,” he added. “And ultimately, the consumer benefits because they’re dealing with an originator who’s well-versed on the product, and that means a better overall experience.”
It’s not just originators who can find renovation loans a bit scary. Borrowers, too, can find the process a bit intimidating. But with the right tools, renovation loans can be godsends for both originators and borrowers.