FNMA HomeStyle Renovation Loans: increasing segment-purchase market

By
Services for Real Estate Pros with CMIT Solutions

For years, if you did a renovation mortgage to buy or fix up your home - it was probably an FHA 203K with limited $.

Today, Realtors dealing with lack of homes are talking with the Clients about a Renovation Purchase mortgage - so that when their Client sees a home that they "love" except: it is missing a pool, needs a renovated kitchen, 5th bedroom, den, finished basement, etc. - they have an alternative.

Every 5th call I get is for renovation (FNMA HomeStyle) Purchase financing.

Why?
1. Purchase prices are exceeding the FHA limits;
2. the borrowers have excellent credit
3. Buyers want the lower Mortgage Insurance cost that a conventional loan offers

Details? 
Maximum LTV: 95% on a primary residence purchase.
Maximum renovation cost $200,000; maximum total loan amount : $417,000
LTV is based on the lower of Cost (See example below) or "As is" (after repaired value) by appraisal

Example?
Purchase Price: $200,000  Renovation Costs: $50,000  Value after renovation: $275,000
95% of the lower (purchase price+renovation costs) = $250,000 x 95% = $237,500

This loan program is a great asset for Realtors who are struggling with sales in markets where
demand is outpacing supply.

note: only approved lenders/banks can offer the FNMA HomeStyle loans; it is Not a standard program that any mortgage broker can offer. They must have a construction/renovation dept that is certified by FNMA.

For more information - please contact: Al Rodenburg, NMLS # 272775/CMPS Certified
at: (281) 236-5743 or : al.rodenburg@flagstar.come or  visit: www.flagstarloans.com/arodenburg

Posted by

Al Rodenburg - NMLS# 272775
Sr. Mortgage Banker

Comments (3)

Ronald DiLalla
Century 21 Discovery DRE 01813824 - Anaheim, CA
No. Orange Cty Real Estate

Hi Al, hopefully this price reduction will result in a quick sale.  Thanks for sharing.

Jul 10, 2014 06:59 AM
Pamela Seley
West Coast Realty Division - Murrieta, CA
Residential Real Estate Agent serving SW RivCo CA

This sounds like a great alternative to standard 203K loan. I've never heard of FNMA Homestyle Renovation loans. From what you say, it is very specialized and not all lenders can do them. Thank you for the education.

Jul 10, 2014 07:06 AM
Al Rodenburg
CMIT Solutions - Spring, TX
CMIT Solutions: trusted network security solutions

Your welcome, Pamela.  A little more information - like all conventional loans, rates are score dependent, but many times the rate is only .25-.375 higher than it would be on a standard purchase. Another key part is that the Buyer is very involved in the process (getting bids on the renovation work that is to be done). And, although we can close conventional loans in less than 30 days, we recommend at least a 45-day lock on a renovation purchase (depends on what needs to be done; if it's a simple item like a pool, 45 days should be fine). Like everything else, we are dependent on everyone involved in the process to provide information/documentation in a timely manner.

Jul 10, 2014 07:12 AM