Homestyle Renovation Loan – Fannie Mae’s Answer to FHA 203K

Adding On

Have you heard of the Fannie Mae Homestyle Renovation Loan? If you haven’t yet, you will. With Fannie Mae winding down the Homepath and Homepath Renovation Loan on October 6, 2014, they now will rival with FHA’s 203K. The Homestyle is a cool little hybrid construction loan if you will. With the Credit Crunch and Mortgage/Real Estate Meltdown in 2008, many loan programs went by the wayside. Naturally all of the subprime loan products. But also loans such as the Foreign National and more importantly the Construction to Perm Loan. With that said, you will now have a mini-construction type of loan for existing homes that you may want to buy and also for those of you that you currently own. Let me explain some of the “bells and whistles” and comparisons to the 203K. I have received many inquiries on the FHA 203K in recent years. It is a pretty decent product on paper. Some love to do them and some don’t. There can certainly be a lot of red tape though with a government product such as the 203K. For example, you cannot put in a pool with this loan program. You are capped at a lower loan amount ($271,050 here in Florida) with most counties and you are also capped at a smaller rehab / remodel amount (Usually around $35K max in repair money). More often than not a lot of realtors and buyers wouldn’t always choose this program but as a last resort. When Purchasing with the Homestyle Renovation program you have a lot more freedom. You have higher conforming loan amounts at $417K and you aren’t capped with what you can spend in repairs or remodeling. This is huge in and of it self! You can also add in a pool or fence for privacy to home using this program. Even make repairs to an existing pool. Popular additions to an existing home my be a new master bedroom and bath, a pool, a remodel of a kitchen or third car garage and the list can certainly go on depending preference and taste. How many time have you as a buyer or a realtor gone out and found a pretty nice home in a great school district, great area but it just lacked something that you just can’t get over? Your first inclination is probably, “Well we like it but wish it had this or had that.” Well, now you can have a pretty solid option to add on to this already great home. This is a chance to put your personal stamp on it and really make it your own. One of the best parts of this whole loan is that you do not need to wait til all the construction is done before you close. Basically, you can expect your process to go as follows: First you hire a contractor. Either you will hire your own (which they will need to be approved through us first) or use one of ours already on the list. They will get a bid together of all the items that need to be repaired and/or you would like added on and remodeled. Once this is done the contractor will get this bid over to our appraiser and they will give a new value of what the home will be at with all upgrades. From there you can still put as little as 5% down or more as payment of that value at closing. Once closed, the contractor will get to work and the repair funds will be held in an escrow account and released in 3 -4 draw schedules as the contractor completes the work. Once all the work is completed, we will inspect and finalize all terms. Pretty simple and really cool! When refinancing a home you currently own with the Fannie Mae Homestyle Loan, it is the same process as you would go about with purchasing a home. Now one of the major differences when using it for a refinance is how it stacks up to a conventional cash out refinance to do home repairs. With a normal conventional cash out you are limited to 85% Loan to Value. With the Homestyle renovation loan you are allowed to use up to 95% Loan to Value still! That is a huge benefit to current homeowners who might be looking to update their home’s current look or more importantly outgrowing their current home but do not really wish to move. Whatever your need or desire might be when it comes to a home, Fannie Mae’s new Homestlye Renovation Loan is sure to be a hit! People are really starting to catch on and grasp what this loan will allow them to do. So get excited! If you have any further questions or would like a free consultation on how to get started, please contact me today! Green House Mortgage is a full service home loan origination entity in Tampa, FL and servicing the state throughout. If you have any questions or concerns with the article or simply need mortgage advice please call 813-732-3155 or email us at info@ghmortgage.com. We are dedicated to giving you the best mortgage consultation available. Green House Mortgage – It Pays to Go Green!