Fannie Mae HomePath Renovation Loan or FHA 203K?
This is a popular question in the renovation finance world: Am I better off with a Fannie Mae HomePath Renovation Loan or an FHA 203K?
The answer is quite personal. You must take into account your personal finances, the project requirements, and type of home, among other issues. I will highlight here a few of the main items for your consideration.
So, you found your way to the FannieMae foreclosure website ( www.homepath.com) and also found the litany of properties in your area. You go through the properties, just like any home shopper would, checking the bedrooms, baths, what the kitchen looks like and how about that back yard! THIS seems like the ONE!
Then you see this:
What is HomePath Renovation Mortgage? You click on the HomePath Financing and find that almost EVERY lender can write a HomePath mortgage, but only a very select FEW can do the HomePath Renovation Mortgage. Some states have only 2 Lenders FOR THE ENTIRE STATE! (Delaware, New Jersey, South Dakota, & New York). By and large, most states have 3 lenders approved to do this loan. WOW... I am sure they are busy!
The FannieMae HomePath Loan is a unique mortgage product that can be used by buyers to purchase Fannie Mae foreclosure homes. This loan is one of the most powerful products on the market today, allowing for a down payment as low as only 3% and NO Mortgage Insurance! Add the fact that most FannieMae foreclosures sell for 50-75 cents on the dollar and you have a recipe for success and equity!
HomePath Loan: Pros
• Down payment as low as 3% (of the purchase price).
• ZERO mortgage insurance required.
• Appraisal is already done.
• Seller contribution to closing costs are allowed.
• Second home and investment properties are eligible.
HomePath Loan: Cons
• Only applicable on Fannie Mae foreclosure properties (see www.homepath.com).
• The market for these homes can be very competitive. The fantastic loan terms combined with the popular location generates lots of offers.
Your "Project Coach™" will walk you through the process step-by-step to determine if this loan is for you. It is the most affordable product on the market today with the absolute best terms for the right customer. When you can get these terms and NOT pay mortgage insurance, it is very hard to beat. Call today and find out if this loan is right for you!
All About Homepath
Fannie Mae has a boatload of foreclosures on the market. These are homes which were foreclosed on the previoius owners, taken posession and now have up for sale. By and large, you can purchase these homes for about 60 cents on the dollar. Allow me to repeat that.... you can purchase these homes for 60 cents on the dollar. Sweet!
The HomePath Renovation Loan is a unique mortgage product that buyers can use on to purchase Fannie Mae foreclosure homes. This loan is one of the most powerful products on the market today. Fannie Mae is 'selective' as to who and how many lenders are allowed to offer this product. (You can view the limited number of lenders listed on the "Approved List.")
HomePath Renovation Loan: Pros
- Down payment as low as 3% (of the purchase price plus renovation amount).
- ZERO mortgage insurance required.
- Appraisal value based on the value of the home AFTER the renovation is complete (the so-called "Subject To" value).
- Seller contribution to closing costs are allowed.
- Second home and investment properties are eligible.
- Renovation amount up to $35,000 or 35% of the "subject-to" appraised value.
HomePath Renovation Loan: Cons
- Only applicable on Fannie Mae foreclosure properties (see www.homepath.com).
- Homeowner must manage project and may not hire a project manager.
- Only "light-to-moderate" renovations allowed.
- The market for these homes can be very competitive. The fantastic loan terms combined with the popular location generates lots of offers.
Your "Project Coach" will walk you through the process step-by-step to determine if this loan is for you. It is the most reasonable renovation product on the market today. When you can get these terms and NOT pay mortgage insurance, it is very hard to beat.
This FannieMae loan is a fantastic product where you can either purchase a new home, or refinance your existing mortgage, and also finance the renovation costs to do a major renovation to your home. Loan to values are based off the final value of the home and the program itself offers certain criteria that other available renovation loans may not.
HomeStyle Renovation Mortgage provides a convenient way for borrowers to make renovations, repairs, or improvements totaling up to 50 percent of the as-completed value of the property with a first mortgage, rather than a second mortgage, home equity line of credit, or other, more costly financing method.
The funds can be used for any repairs or renovations that are permanently affixed and add value to the property. Eligible borrowers include individual home buyers, investors, nonprofit organizations, and local government agencies.
FannieMae HomeStyle: Pros
- Down Payment = As low as 5% of purchase price (or existing debt on a refinance) + renovation costs
- Primary Residence, Second Home, Investment, Non-Profit all Eligible
- "Soft" Construction Costs can be financed (inspection fees, architectural drawings, plans, permits)
- Large assortment of eligible improvements
FannieMae HomeStyle: Cons
- Eligible Properties: 1 - 2 Unit properties Only
- Higher Credit Score requirements the higher the LTV (loan-to-value)
- Minimum $50,000.00 construction fund
- Mortgage Insurance applies (LTV's > 80 %)