A Comprehensive Guide About Fannie Mae Homestyle Loans

Are you looking for the best Renovation Loans Near Me? If so, look no further and try Fannie Mae Homestyle Loans!

This loan type is of a different kind and enables the home buyers to borrow both the purchase price of their potential home and any renovation costs and blend it up to one mortgage loan amount.

Fannie Mae Homestyle Loans lets home buyers buy or refinance a home and renovate it using the same single mortgage. It lets the borrower buy a fixer upper home and pay for the renovation costs with a single mortgage loan. 

This type of home renovation loan blends the funds that one needs to buy and renovate into one loan. The borrower will thus face just one set of closing costs and have just one monthly payment to make.

Borrowing limit of Fannie Mae Homestyle Loans

With a home style loans, one can easily borrow up to 95% of the property’ after the renovation value up to the Fannie Mae’s Maximum loan limit prescribed. This increases the borrowing power and makes it easier for the borrower to get the funds they need for the repairs and renovation work easily.

How does the loan work?

1. Find a fixer-upper for sale that needs renovation repairs or decide to renovate the home by borrowing against its after renovation value.

2. Find the approved lender and make a loan application after taking help from a loan consultant

3. Work with an approved contractor and architect to draw up and finalize your plans and prepare the detailed bid for the renovations. Send the copy of this to the lender.

4. Based on the renovated value of the property, the appraisal report is prepared by the lender

5. Closing of  the loan

6. The lender will place the renovation funds in an escrow account. If the renovation amount is greater than $35,000 or structural in nature, HUD consultant must be hired to authorize the release of the funds. 

7. The renovation must begin within the thirty days of the loan closing and must be completed within a six month period. Contractor is paid on the basis of draw schedule and inspections.

8. The lender manages draws based on the inspections; that are carried out to determine where a project is in relation to the proposed timeline and that the construction work is in sync with the initial plan. When the renovation is completed, the lender will conduct final inspection to check the project is as per the original specification and release the final funds of the contractor.

Wrap up

The best aspect of Fannie Mae Homestyle loan is that the single loan covers the purchase and renovation of the property. It can be used for renovate and refinance. Collaborate with a good home loan consultant to help you get the guidance and support in furnishing all the formalities of the loan.