Are you in need of home repairs and looking for a source of financing? There’s an array of ways to pay for your needs: lines of credit, in-store financing, or home equity loans are some examples. Today we are here to tell you about another type of financing called a Homestyle Renovation Loan. This loan can be obtained either before or after the purchase of your home. Professional Mortgage Solutions is here to help Rego Park, NY homeowners learn the essentials of using one in their renovation project.
The Basics of a Homestyle Renovation Loan
Homestyle renovation loans are typically used to secure additional financing on repairs needed in a new home purchase. This product is offered by Fannie Mae and can be rolled into your existing mortgage for added convenience. Many times, these loans are used for small home repairs to increase the value of the home. For this reason, the loan provided will be based on the future value of the home after renovations are done.
Securing Approvals for Homestyle Renovation Loans
Here are the basic requirements that help get your homestyle loan approved:
- You must work with an eligible contractor or architect to make repairs and seek approval on plans before they begin their work. Repairs must be cost effective.
- All lenders and contractors may need to be Fannie Mae approved.
- The plans must include specific timelines and deadlines. Many lenders hope to see completed repairs within six months of home closing or 100 days for energy upgrades.
- You can apply as an individual, a business, or a nonprofit organization. If you apply as an individual, having a good credit score and low debt-to-income ratio will help your chances of approval.
- You may have to work with an appraiser who will confirm the value of the home once your repairs are completed before you can pay your contractor.
- You cannot use this loan for repairs to manufactured or mobile homes.
The Benefits of Using Homestyle Renovation Loans
A Homestyle Renovation loan should increase the value of your investment, thus raising your equity in the building quickly. Many times, your energy bills lower as a result of the upgrades. In some cases, a homestyle loan will have lower interest rates than other types of financing. Inspections, fees, and permit costs can be covered with this loan. A major benefit is that this can be rolled into your mortgage, so you do not have any additional bills to worry about.
Professional Mortgage Solutions in Rego Park, NY is here to help you purchase a home in need of minor repairs with this unique loan product. Contact our friendly staff with your Homestyle Loan questions today and get started!