There are currently a number of bank-owned properties in the Phoenix metro area that need a few repairs before they are livable. Some need only a few – some need quite a few.
If you are an investor who is considering purchasing a property that is currently owned by Fannie Mae that is in need of a little work – the Fannie Mae Home Style renovation mortgage (a close cousin to the Fannie Mae HomePath renovation mortgage) is the loan program designed for you.
At closing, all funds for renovation will be escrowed in an interest-bearing account. After all renovation work is complete, any remaining funds in the escrow account will be used to pay down the principal balance of the mortgage.
Fannie Mae HomeStyle Renovation Mortgage Highlights:
- Up to 95% LTV
- Renovation funds escrowed in an interest bearing account
- Soft costs (architectural services, engineering, permit fees, etc.) may be financed
- Loans are underwritten to FNMA guidelines
- Credit score minimums range based on LTV requirements and income documentation requirements
- Appraisal must come from an appraisal management company approved by the lender
- There is a 5% declining market LTV hit for properties that are in declining markets
- Mortgage insurance requirements are based on the LTV calculated using the after-improved value of the property or the cost base — whichever is less
- The HomeStyle program is available for refinancing options as well as purchase financing
HomeStyle Renovation Mortgage: More Information
With the HomeStyle renovation mortgage – you can basically do any kinds of repairs as long as the appraised value can support the value and the repairs or improvements are common for the area. The repairs must be completed within six months and can’t be more than 50% of the final appraised value.
When thinking about the HomeStyle renovation mortgage – be sure to consider the types of improvements you are undertaking – many times repairs such as water damage, mold, structural repairs all will require more work than you may initially think.
Is the Fannie Mae HomeStyle renovation mortgage the best loan for investors who want to purchase a property in need of a few repairs? I can’t think of a better one.
HomeStyle Renovation Mortgage
Lender Guidelines (.pdf, 169K, 4 pages)
Arizona Mortgage Rates for April 7, 2009
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Please notify us of any and all fannie mae properties available.
Finding a lender, however, that does the homesytle renovation loan, much less a seasoned lender is actually the most difficult part. If you know of any, I’m looking for one.
The Homestyle Renovation Loan is a great product. Good for reno on 2nd homes, investors. owner occupants wanting to turn their primary into an income property with a 2nd unit , unfinished builder foreclosures, etc.
For those owner occupants with 10% down and good credit the Homestyle is much cheaper and more flexible than the 203k