From what I am seeing, much of the activity from buyers is coming from first time home buyers wanting to take advantage of the 8,000 tax credit or investors buying bank-owned properties.
For the investors, it seems many of them are paying cash – because until recently, there wasn’t very many programs available for investors and Fannie Mae has limited the number of properties that you could own to 4. Well, now two things have changed:
- There is a new Fannie Mae program called the Fannie Mae HomeStyle loan program that can be used by investors who want to buy homes in need of a little repair work.
Highlights of the Fannie Mae HomeStyle Loan:
The HomeStyle Renovation mortgage program allows borrowers to combine the cost of the home with the costs for renovation or remodeling.
At closing, all funds for renovation will be escrowed in an interest-bearing account. After all renovation work is complete, any remaining funds in the escrow account will be used to pay down the principal balance of the mortgage.
Fannie Mae HomeStyle Renovation Loan Highlights:
- Up to 95% LTV (see LTV matrix below)
- Renovation funds escrowed in an interest bearing account
- Soft costs (architectural services, engineering, permit fees, etc.) may be financed
- Loans are underwritten to FNMA guidelines
HomeStyle Renovation Loan LTV Requirements:
- Primary Residence – Up to 95% LTV
- Second Home – Up to 90% LTV
- Investment Property – Up to 75% LTV
HomeStyle Renovation Mortgage: More Information
Borrowers can basically do any repairs / renovation to the home that they want as long as the appraisal supports the value, the improvements are common for the area (pools, for example), the repairs can be completed within six months, and the repairs do not exceed 50% of the after improved appraised value.
