FHA 203k vs HomePath Renovation vs HomeStyle Renovation

Renovation Lending, Bruce Moore, Louisville Realtor

FHA 203k vs HomePath Renovation vs HomeStyle Renovation

Guest post: David Pauley, Amerifirst Home Mortgage
Reprinted with permission

Renovation Lending, Bruce Moore, Louisville Realtor

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.

FHA 203k

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 Renovation

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.

HomeStyle Renovation

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.

Renovation Lending, Bruce Moore, Louisville Realtor

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
RE/MAX Connections
Louisville, Kentucky

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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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Getting a Mortgage in Today’s Environment

Getting a Mortgage in Today’s Environment
Thank you, Sandy Melton of Century Mortgage Co.

Divorce your rate campaign!  When shopping for a mortgage, you need to know that you will be able to “perform” per the terms and conditions of your contract.  I have been originating for over 30 years, and I have worked with the largest banks in the country, owned my own company, and I must say, I am thrilled to be with Century Mortgage Company, which is the largest originator in this region.  I can say with confidence and experience that Century Mortgage has been the best decision I have made as far as my industry.  Remember, rate is one thing, but the APR (annual percentage rate) is what you are really paying.   If you got this fantastic rate with a huge bank, but you can’t close, what good did this do you.

Mortgages are a good kind of debt, and one of the only that are tax deductable.  Many of you only do this every 5 or 7  years, and remember, what you read on the internet is not gospel.  If so, we would ALL lose 30 lbs in 30 days, guaranteed.  You want to depend on someone that does this every day of their life!

Speaking of divorce, if you are finding yourself in this situation, call me and we can go over the options of refinancing.   Many folks in Kentucky qualify for “first time homebuyers” mortgages that offer down payment assistance, even though you may have just sold a house, or had to quit claim it over to an ex spouse, so don’t panic if you have the  money for a down payment, there are programs designed for your needs….as long as your credit score is over 640 and you have a steady job, you can get into a home.

Credit scores are a tricky, frustrating requirement that lenders require, and typically it must be 620 or greater.  If you or a child are trying to build a credit score, we can guide you in the right direction with the tools to accomplish your needs.  You must have three trade lines that have been active for typically a year.  A trade line is revolving credit such as a VISA card, and an installment loan such as a car loan.  Do not close your revolving credit cards, this will lower your score!

Sandie Melton
Loan Originator
Century Mortgage Company

502-753-4162 (Office)

Century Mortgage, Bruce Moore Realtor Louisville





Could FHA mortgage loan changes hurt your loan chances?

If you’re a first-time or cash-strapped home buyer, an FHA home loan may be your best option. But thanks to the housing crisis of recent years, the FHA has tightened some of its lending guidelines. Can you still get “in” on the best FHA rates before several changes go into effect? Now’s the time to find out. 

FHA mortgage insurance: what the changes mean for potential home buyers

The Federal Housing Administration (FHA) has traditionally given less affluent homebuyers their best chance at owning a home. FHA loans require little (or no) down payment and come with lower interest rates than traditional loans offer. But the rash of foreclosures and bankruptcies in the last few years has prompted the Feds to clamp down on its lending policies. So you’ll need to move quickly if you want the lowest rate/payments for your loan.

On April 1, the FHA raised its Mortgage Insurance Premium (MIP) rates by 0.1 percent. MIP is the insurance you (the buyer) pay to protect the lender if you can’t make your mortgage payments. This percentage, while small, increases your monthly mortgage payment. The actual fee depends on the amount borrowed, the terms, and your down payment. That’s because the MIP is a portion of the overall payment – the less you put down, the higher the insurance.

In early June, another major change is coming to the MIP terms. In the past, you could drop this premium once your loan was paid down to 78 percent of the original value or five years, whichever came first. However, this new change requires you to keep the MIP for the life of the loan. This requirement is a key factor you’ll need to consider as you decide how much home you can afford.

Is FHA still your best way … ?

… only your Realtor knows for sure. If you’re considering going the FHA route, be sure to have your Realtor get the complete details on what changes will be in place by the time you close and what you can do to “get in under the wire.” Get the facts before you get the loan.

Bruce Moore, Realtor
RE/MAX First
Louisville, Ky

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