If I had a dollar for every time someone responded to my\u00a0comment\u00a0about remodeling and DIY projects with the phrase “welcome to home ownership!”– I’d be rich! \u00a0Not everyone has the means to build their pinterest-inspired dream home from the ground up–\u00a0but what if I told you\u00a0there are\u00a0mortgage programs designed\u00a0to help\u00a0renovate\u00a0existing structures? \u00a0What if\u00a0your dream home already exists,\u00a0and just needs some updates\u00a0to make it your own? \u00a0No DIY-ing required!<\/p>\n
Renovations programs are not very well known, and were rather unappealing before the housing crisis. \u00a0They\u00a0were thought to be confusing and complicated. \u00a0As a result of the distress caused by the negative housing situation, these type of programs became more attractive to potential home buyers who sought ways to buy homes at a lower price and improve upon them. \u00a0The shift in the focus of the consumer has brought the Federal Housing Administration (FHA) 203(k) rehabilitation loan and Fannie Mae HomeStyle Renovation Mortgage to the forefront of financing options for prospective home buyers that are in the market for a fixer-upper. Both of these programs function to\u00a0refinance existing homes\u00a0as well.<\/p>\n
When purchasing a home with a FHA 203(k) Renovation Mortgage<\/a> or a Conventional HomeStyle Renovation Mortgage<\/a>, the funds designated for repairs to the property are placed in an escrow account with the mortgage lender\u00a0after closing. After all repairs have been made,\u00a0a final inspection takes place. At this time, all contractors may submit their invoices to the lender to be paid. Renovations may not be completed by the homeowner.<\/p>\n Now, you might be wondering, what is the difference between the two programs? Essentially, 203(k)<\/a> is an FHA Loan Program<\/a>\u00a0while HomeStyle Renovation<\/a> is a Conventional Loan Program<\/a>. Each program, therefore, must adhere to its respective guidelines for\u00a0credit score and debt-to-income limits. FHA has more strict requirements on what types of repairs can be complete to the home while the rule of thumb for the HomeStyle Renovation loan is that it can be anything that increases the value of the home and is fixed to the property. The HomeStyle Renovation Loan can be used to buy or refinance a primary residence, second home (vacation home) or even an investment property while the FHA 203(k) loan is only available on primary residences.<\/p>\n If you have low credit and the property\u00a0is only in\u00a0need of minor\u00a0repairs, the FHA 203(k) would probably be best for you, as it allows credit scores down to 580\u00a0and only requires as little as 3.5% down.\u00a0If your credit score is over 660 however, and you have 5% to put down, you may be better off with a HomeStyle renovation loan, as it would likely give you a lower overall mortgage payment. In any case, if you are unsure, contact a loan officer at Riverbank Finance to discuss each program’s specific guidelines and determine which would be the best fit for you.<\/p>\n Take a look at Fannie Mae\u2019s guidelines<\/a> for HomeStyle Renovation Loans Have a specific scenario you\u2019d like to run past us?\u00a0 Give us a call to speak with one of our licensed loan officers. We would love to recommend the best loan program for you and your situation.<\/p>\n To apply for a Renovation Mortgage call Riverbank Finance today at 1-800-555-2098.<\/p>\n\n <\/p> FHA 203(k) Renovation Loan VS. Conventional HomeStyle Renovation<\/h3>\n
Which Renovation Mortgage Program is Best for Me?<\/h3>\n
\nAlso check out FHA\u2019s 203k Renovation guidelines<\/a><\/p>\nApply for a Renovation Mortgage<\/h3>\n
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