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Renovating with Fannie Mae's help

A HomeStyle Renovation loan provides economical financing in a single package.

Jillian and Chris Soriano and daughter Tessa, 2, in the newly renovated kitchen of their home in Haddon Heights. They opened up a wall, added the center island, and upgraded cabinets and appliances. ( MICHAEL S. WIRTZ / Staff Photographer).
Jillian and Chris Soriano and daughter Tessa, 2, in the newly renovated kitchen of their home in Haddon Heights. They opened up a wall, added the center island, and upgraded cabinets and appliances. ( MICHAEL S. WIRTZ / Staff Photographer).Read more

Chris and Jillian Soriano bought and then renovated their Haddon Heights house using a Fannie Mae HomeStyle Renovation loan to finance the improvements.

The couple moved into the four-bedroom, two-bathroom house last summer "knowing we were going to rip out the kitchen," said Jillian Soriano, who wanted an open-concept cooking and dining area.

"I wanted to take down the wall separating the kitchen and dining room and replace it with a butcher-block island with two sets of seating," she said. "I didn't want dark granite, but something lighter" to warm up the space.

Their contractor, Bill Farina of Vaspoli Builders, helped the Sorianos create a vision for the renovation.

"We'd only been in the house three times before we purchased," Chris Soriano recalled. "Bill is an expert in these types of loans," in which the contractor receives a "draw" of money from the lender based on the work completed.

Vaspoli was "good about working within the contingencies of the HomeStyle loan," he added.

The couple closed on the house in June, and the work was completed within 140 days, according to the terms of the loan.

Fannie Mae HomeStyle Renovation loans work this way: The mortgage permits borrowers to include financing for home improvements in a purchase or refinance transaction of an existing home. Borrowers can make renovations, repairs, or improvements totaling up to 50 percent of the as-completed appraised value of the property with a first mortgage, rather than a second mortgage, home-equity line of credit, or other more costly financing method.

Eligible borrowers include individuals, investors, nonprofit organizations, and local government agencies, Fannie Mae says.

Lenders like HomeStyle mortgages because they can offer buyers loans for renovations of one- to four-unit primary residences and one-unit second homes or investment properties.

Borrowers take out a single mortgage, which means lower closing costs and, typically, a lower interest rate.

Typically, the loan amount is based on the home's estimated "as-completed" value or actual cost, whichever is less.

Stonegate Mortgage Co. ultimately administered the Sorianos' loan. AnnieMac Home Mortgage in Mount Laurel sold the loan shortly after closing.

"I can't think of anything we would have done differently - the process went very well," Chris Soriano said. "It just required us to stay very close to the process pre-closing, to make sure everyone - contractor, consultant - were getting their paperwork in on time for us to close in a relatively compressed time frame."

The Sorianos liked the HomeStyle loan because "it would have been crazy to get two separate loans," he said. With this, they didn't have to.

For the 2,000-square-foot single-family home, the bank loaned the Sorianos $384,750, which included the purchase price of the house; the renovation cost totaled $34,902. The after-improvement value was set at $410,000, so the Sorianos gained about $25,000 in equity. Their interest rate was 4.875 percent.

Chris Soriano, a lawyer with Duane Morris in Cherry Hill, serves as chairman of the Planning Board of Haddon Heights, as well as one of Haddon Heights' elected representatives to the Camden County Republican Committee.

He is also a member of the Order Sons of Italy in America, Lodge 2311. After the renovation, the couple dubbed their home "Villa Soriano."

The once dated-looking 1960s-era first floor now looks suited to today, Chris Soriano said. "The houses around here are all at least 50 years old, but we liked the idea of renovating and customizing."

The renovation's big splurges were for the butcher block, the custom cabinet doors in the kitchen, and the backsplash in the upstairs bathroom, which cost about $7 per square foot for the special "penny tile" style.

The couple saved money by installing the lighting and the backsplash in the kitchen themselves.

Jillian Soriano and the couple's two children, Jack, 4, and Tessa, 2, were at home even as contractors ripped out the kitchen tile, down to the subfloor, then refinished the red oak floors in the first-story dining room and installed matching wood in the kitchen.

"All the craziness happened at the same time," she said, laughing.