FHA 203k vs HomePath Renovation vs HomeStyle Renovation
Guest post: David Pauley, Amerifirst Home Mortgage
Reprinted with permission
Which renovation mortgage is the best when it comes to financing and fixing up a house? Is it the FHA 203k? What about buying a Fannie Mae-owned home with HomePath Renovation? Have you heard about HomeStyle Renovation mortgage as an option? Which one is the best deal for you? We’re going to take a look at each of these, their pros and cons, and let you decide for yourself which route you’d like to go in today’s housing market.
Before we compare, let’s take a look at the basic definitions of each of these mortgage loan options.
The 203k loan is a mortgage insured by the Federal Housing Administration, or FHA. You can make home improvements to the house you want, or the home you already own. Use the funds for simple upgrades to your home like a kitchen or bath improvement, or to completely reconstruct a home that is presently unlivable. You can even use a 203k Rehabilitation Loan to tear down an existing structure and build a new one using some portion of the existing foundation.
You can borrow up to 96.5% of the appraised value – based on the value when the improvements or repairs are completed. The home must be owner-occupied and a primary residence, so no investors or vacation homes.
HomePath is a mortgage loan option available through Fannie Mae. The mortgage backer is not in the business of managing properties, so it aims to unload these Fannie Mae-owned homes to qualified buyers with incentives like low down payment, low prices and breaks on mortgage monthly mortgage insurance.
HomePath Renovation is a second part of HomePath, that allows a borrower to purchase a property that requires light to moderate renovation on Fannie Mae-owned properties. The one loan amount includes both the funds for the purchase and renovation – up to 35% of the as completed value, no more than $35,000.
The HomeStyle Renovation option offers a low down payment option for qualified borrowers, as well as the chance for investors or buyers looking for a second home to buy-and-remodel.
With HomeStyle Renovation you can get a “purchase transaction mortgage” (you buy a home) or a limited cash-out refinance mortgage and receive funds to cover the costs of repairs, remodeling, renovations or energy efficient improvements to the property.
There are no required improvements or restrictions on the types of repairs allowed or a minimum dollar amount for the repairs. Repairs or improvement, however, must be permanently affixed to the real property and add value to the property.
As you can see, each loan option has requirements and benefits. If you’d like to avoid mortgage insurance, you may want to consider HomeStyle Renovation. If you’re interested in only Fannie Mae-owned properties, HomePath Renovation might be up your alley. Or if you’re looking to do some major repairs to a home like knocking it down to the foundation or adding a second story, FHA 203k might be the way to go.
Bruce Moore, Realtor
ABR – Specialist in working with Home buyers.
E-Pro – Specialist in using the latest Technology to help buyers find and buy their dream home.
IRES – International Real Estate Specialist
To find out more about which loan is right for you, call David Pauley!
Amerifirst Home Mortgage
Office: (502) 327-9240
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