Is a Fannie Mae Homestyle Loan the Best Option for Renovation

For homeowners interested in buying a fixer-upper, the Fannie Mae HomeStyle Renovation Home Loan is a great option. The HomeStyle loan has a number of benefits to consider. Why? Housing inventory remains low. Moreover, this renovation loan combines renovation and repair costs into a single loan. Hence, the burden of financial burden will not be too high.

How does it Work?

This loan is a government-backed loan that can be used to help homeowners buy a property that needs work. The cost of repairs and renovations is predicted beforehand, so you only have to pay one monthly mortgage that covers the total amount (renovation costs + purchase price). That's why it's highly one of the preferred mortgage loans.

The cash for renovations and repairs is held in a dedicated custodial account. You'll start paying your house payment as soon as the loan is closed. The contractor can begin work right away and submit funding requests at each milestone. Every time there is a "draw" on the account, it will be inspected.

There is a final examination and appraisal when the task is done. After a little paperwork to change the title, you'll be able to relax and enjoy your new house!

How to Apply for the Fannie Mae HomeStyle Loan?

Step 1: Locate an approved lender and begin the pre-approval procedure.

Step 2: Hire a professional contractor and collaborate with them to produce specific plans and a timeline. To indicate how long it will take, make a timeline with milestones.

Step 3: Inform your lender of the final plans.

Step 4: Arrange for an appraiser to inspect the house and review the plans. The appraiser will give you a price for the "completed property."

Step 5: Talk to your lender about the results to see how much you've been approved to borrow.

How is this Loan Doing Today?

Although much improved, Fannie Mae still has a long way to go. Fannie Mae reported its highest quarterly revenue since the crisis began in August, thanks in part to rising property prices. It was the company's second consecutive profitable quarter. Meanwhile, for the fifth time since the conflict-hit, Freddie Mac reported quarterly earnings.

The US Treasury Department reworked the terms of the government bailout in August due to improving financial conditions at both corporations. Previously, Fannie and Freddie were able to borrow money from the U.s. Treasury as needed to supplement their capital reserves. In exchange, the corporations gave the government preferred stock, which they had to pay a 10% dividend on. The Treasury will simply take all of Fannie and Freddie's profits at the end of each quarter under the new guidelines and provide capital as needed if a quarterly loss occurs.

While some of the worst problems appear to have passed, Fannie Mae and Freddie Mac are still far from being debt-free. According to a few financial experts, the corporations could take up to 15 years to fully repay taxpayers.

Final Words

In reality, the Fannie Mae HomeStyle loan will provide you with everything you need to build the home of your dreams while also allowing you to take advantage of affordable interest rates.

My name is Ranny Watson. I'm a professional Digital Marketing Expert.