FHA 203k or HomeStyle® Renovation Mortgage in Millersville MD or anywhere else for that matter.
How do you choose which renovation loan is best for your client? Lets look at some of the main differences.
1. PMI - Private Mortgage Insurance is mandatory with the FHA 203k and it doesn't go away vs the potential for NO PMI for the FNMA HomeStyle® Renovation Mortgage. The FNMA product can have PMI if you don't put down the 20% which is typical but they also have a reduced PMI of you put down smaller down payments under 20%.
2. The type of work you are doing is similar however you have more latitude with the FNMA product. The buyer has more options to pick and choose the "non safety and health" items they might want to do.
3. If your client has less than steller credit or a smaller downpayment then FHA is likely the best choice.
4. The FHA product is for owner occupants... if you are an investor then the FNMA product is for you. I know, you have to put a little more downpayment but you get the money for the repairs and you get a 30 year - fixed rate mortgage so you don't have to refinance right away if the construction doesn't go as planned.
We have an office in Millerville MD and can provide local information for you in that area should you need more info.