Hurricane Sandy caused major damage to the Long Beach Island area when it made landfall at the end of October 2012. The impact of the storm and the damage it caused prompted a wave of new construction and renovation throughout the LBI real estate market.. The face of Long Beach Island has been changing with new homes and major renovations taking place on LBI which should ultimately produce a stronger real estate market. Therefore,it is important to keep in mind the options available in the mortgage market for second homes. It is always important to remember that lending rules are changing all the time and it is best to consult with a mortgage lender to see what the best options for you currently are.
A little known fact is that with conventional financing, banks lend money on the structure: not the land. Therefore, if a property has been damaged by Hurricane Sandy and was gutted, it will no longer qualify for traditional financing. The good news is, there are many loan products and Mortgages for Storm Damaged Homes in the Long Beach Island real estate market available to consumers.
The type of loan a buyer should seek will depend on what the intended use of the property will be. A primary residence will qualify for 203k financing whereas a second home or investment property will be limited to a Homestyle loan. If the property was structurally damaged, meaning the foundation needs to be replace, the building needs to be raised or an addition will be put on the house, a full 203k loan is needed. Homestyle renovation loans are available for primary homes, secondary homes and investment properties in the Long Beach Island real estate market. Homestyle loans will group the purchase price of the land and the estimated cost of renovation and loan 75% of the either project.
There are a number of alternative strategies for financing a home in the LBI real estate market. For example:
Seller financing is a rather straightforward process by which a seller, assuming they do not have a mortgage themselves, may allow transfer of the property to the buyer for only a down payment and a monthly payment for a short period of time. This can be particularly useful for someone looking to build a new home. Since construction loans can be difficult to obtain, a seller may allow a short-term mortgage, for one or two years, so the buyer can utilize a supply of cash to build a new home. Once the new home is complete, it can be refinanced and the seller can be paid off in full. This can have many advantages as the loan will be less expensive for the buyer, and the seller will obtain more money in the long term through interest payments.