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Freddie Mac Rolls Out New Lower-Cost Renovation Mortgage

The mortgage giant says “CHOICEReno eXPress” helps buyers and owners reduce costs compared to using credit cards or unsecured financing for small-scale projects.

MCLEAN, Va. – Freddie Mac announced a new CHOICEReno eXPress mortgage, which helps homebuyers and homeowners finance the cost of small-scale renovations with a single-close mortgage.

Freddie says its CHOICEReno eXPress fills a need for a streamlined, affordable financing option for buyers who plan to make cosmetic renovations, such as replacing windows and doors, roof repairs, minor remodeling and interior or exterior painting. Freddie posted a list of frequently asked questions on its website.

“CHOICEReno eXPress expands upon the Freddie Mac CHOICERenovation mortgages, which were designed to help address the nation’s aging housing supply … to support the increasing demand for cost-effective financing solutions,” says Danny Gardner, senior vice president of client and community engagement for Freddie Mac’s Single-Family business. “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.”

Lenders can sell CHOICEReno eXPress mortgages to Freddie Mac when the loan proceeds are used to pay for renovations of up to 10% of the home’s as-completed value (up to 15% in rural regions with high needs classification). Depending on the purchase price, it doesn’t require special lender pre-approval or lender recourse. A completed inspection is required, however, to verify that the planned renovations were completed.

“Lenders with an interest in providing a renovation mortgage to their clients but limited experience in renovation and construction lending, will also find CHOICEReno eXPress is an attractive offering because of its streamlined operational requirements,” says Gardner.

Freddie Mac also announced that it updated its requirements to give lenders greater flexibility when offering its flagship CHOICERenovation mortgage:

  • Allowing 100% of the cost of materials to be advanced and renovation costs to be paid directly to a home improvement store
  • An ability to use proceeds to pay off short-term financing for prior renovations of an existing home
  • Allowing a borrower to not occupy a primary residence while renovations are ongoing

Launched in 2019, the CHOICERenovation proceeds can also be used to renovate a property damaged in a natural disaster or for renovations help a borrower prevent damage from a future disaster.

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