Whenever you’re learning about a new loan program that might apply to your life, I’m sure you come across numerous questions that need answers to.
We’ll be going over some of the most commonly asked questioned
If you want to learn more about what’s going on with the HomeStyle renovation loan, then check out the information about the loan limits, some pros and cons, and read the main article on the loan program.
I encourage you to take a look at everything and see whether or not the HomeStyle renovation loan is right for you.
Here's a quick rundown of our list:
- Do I have to use this on the house I live in?
- Can I do the renovations myself?
- Is the loan amount based on the value of my home?
- Can I buy a house with this loan too?
- How involved is the lender in the renovation?
Do I have to use this on the house I live in?
The short answer to this question is no.
The longer answer has to do with your credit score and what you want to do.
If your credit score is 700 or higher, then you will be able to use this loan on your second home, your vacation home, or a house that you want to flip
In fact, you don’t just have to use this loan on a home.
If you are part of an organization that wants to improve its offices (like a nonprofit or a governmental agency), then you will be able to use this loan to improve the building that you are working in.
This is great news for an organization that really needs to spruce up their office, not only for their own comfort but for any clients or investors that come in.
Can I do the renovations myself?
This is one of the best parts of the loan, you will be able to use this loan and do some of the work yourself.
Of course, there are some rules that come with doing the renovations yourself.
Fannie Mae won’t let you just run with the money and do the construction all yourself.
You will also have to factor in the 12-month period that you have to do all of the renovations.
If you are constantly working, you might want to think hard about all of the work that you want to do and what that will look like with your schedule.
In addition to this, you will have to consider the limit on the funding.
You will receive a smaller payout if you are wanting to do the renovations yourself.
Of course, this limit is put in place to make sure that you’re not trying to do too much in a smaller period of time.
In addition to the financial restrictions, you will also have to have an inspection for projects that are going to cost over $5,000 when you are doing it yourself.
However, if the things you are doing are more cosmetic or don’t involve major construction, then this loan will be perfect for you.
You can use it to get some new appliances in your kitchen and repaint the rest of the house for sure.
If your house needs a little bit more work, then you might want to seriously consider finding a contractor to help you do the work.
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Is the loan amount based on the value of my home?
Yes and no.
The value of your home is typically used to figure out the value of the loan, but typically it is based on the current value of the building.
However, with the HomeStyle renovation mortgage loan, the value will be dependent upon the anticipated value of the home.
This does mean that you will need to have some serious plans ready before you start looking for this loan.
Bua an appraiser will have both the planned renovations and a look at the house to figure out what the value will be.
After that point, your loan will be dependent on how you are planning to do the work.
If you are planning to do the renovations yourself, you will receive 10 percent of the anticipated value.
If you are having a contractor do the work, then you will be able to receive 50 percent of the anticipated value of the home.
There are some limits that you’re going to need to know about that are set by Fannie Mae, but those will mostly matter to those that are refinancing.
Can I buy a house with this loan too?
This isn’t just for people that want to renovate a home or building that they already own.
You will be able to purchase a home and have money for the renovations that are necessary as well.
This makes this loan a very great deal for those that want to flip homes or that are looking for a home and want a construction project.
There may be some extra details that you will need to know about, such as the loan limits that are already set by Fannie Mae.
But if you want to a purchase and fix up a home, you should be able to.
If you have more questions about how you will go about buying a house and renovating it with this particular loan type, I would be more than happy to answer any of your questions.
How involved is the lender in the renovation?
While Fannie Mae will let you pick your own contractor or whether you want to use a contractor at all, there are some things that you need to do.
You will have to get your contractor approved by Fannie Mae.
This isn’t always a big problem, but it is an extra hoop to jump through.
In addition, you will have to get an inspection when you are doing projects yourself that will cost over $5,000.
These requirements are part of the way that Fannie Mae makes sure that you’re doing what you should be doing.
They also will withhold funds from you and the contractor until projects are completed.
This is another way that they make sure that you are doing what you’re supposed to be doing.
The involvement of inspectors or the way that Fannie Mae deals with funds may be annoying to some individuals, but this is still a great loan that can help you get your home exactly the way that you want it.
What do you think?
Is taking advantage of this mortgage loan something for you?
Of course, you might have more questions about what’s going on with the HomeStyle renovation loan, but I have information about the loan limits, answers to some commonly asked questions, and some pros and cons about the program.
I encourage you to take a look at everything see whether or not the HomeStyle renovation loan is right for you.
Your HomeStyle Insider,
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