The Fannie Mae Homestyle® renovation mortgage allows a home buyer or homeowner to improve and or repair their property with just one loan. If you are purchasing a bank owned or short sale residential property, or your home is in need of repairs or improvements, the Homestyle® renovation mortgage may be your best option for financing. This mortgage type allows a single mortgage to encompass the sales price plus repairs and improvements into a single mortgage, based on the completed appraised value of the house. This option is extremely beneficial considering other more costly financing options, such as: obtaining secondary financing or financing home repairs with unsecured revolving credit. For new and current homeowners in need of funds for improvements or repairs, the Homestyle® Renovation Mortgage is a welcomed financing option.
Below are some of the benefits of the Homestyle® Renovation Mortgage:
• Various Terms Offered – Fixed rate 30 and 15 year terms and variable rates are offered under this program.
• Purchase or Refinance – This loan options is available to both current homeowners who want to repair or improve their current house as well as new home buyers who want to repair or improve their house right after they take ownership of the property.
• Eligible Properties- Principal 1 to 4 unit residential properties, second homes, and single-family investment properties are eligible. Condos, co-ops, and planned unit developments may also be eligible, if they meet certain requirements.
• Down Payment – Borrowers can finance up to 95% of the as complete value of the property. As little as a 5% down payment is needed. The required down payment is based on the borrower(s) middle credit score.
• Financeable Mortgage Payments – Up to six months of mortgage payments for owner-occupied properties can be rolled into the mortgage to cover non-occupancy costs during the renovation process.
• Second Mortgages Available – Borrowers can qualify for up to 105% of the as completed appraised value of the property, if they also qualify for a simultaneous community second mortgage.
This program requires that the borrower must choose their own licensed and registered contractor to perform all the repairs, improvements, and renovations. The contractor must also complete the contractor profile report form and be approved by the lender. The repairs and improvements cannot exceed 50% of the completed appraised value of the home. Renovation costs include: material, labor, fees, permits, licenses, and a 10% contingency reserve. For more information on this loan product, please contact Fannie Mae or a local Homestyle® Renovation Mortgage loan specialist.