The Home Renovation Option for Property Investors
Owner Occupied & Second Home Purchases
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Distressed Home Inventory although not at its high, continues to remain a concern for the housing industry. Many Community Banks are no longer offering short term financing for property investors leaving them to scrambling for LOC’s, by turning to Hard Money Lenders with extremely high rates; low LTV and deep add-on fees.
The Fannie Mae HomeStyle Renovation Loan can be used by investors to purchase distressed properties with the intent as income producing properties. It’s a lot like the Fannie Mae HomePath Program, but the property DOES NOT have to be owned by Fannie Mae.
Highlights of the Fannie Mae HomeStyle Loan.
The HomeStyle
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There must be no bankruptcies or foreclosures in the prior 7 years.
There must be 2 years of tax returns supporting any ordinary income and rental income from all properties.
Fixed Rate Loans with 15 and 30-year terms and NO prepayment penalty.
Up to 6 months of payments can be included in the loan amount.
Fannie Mae’s Delayed Financing Rule is allowed for a home purchased free & clear.
Home Buyers, Second Home Purchasers or Property Investors can basically do any repairs or renovation to the home that they want, as long as the appraisal supports the improved value and the improvements are common for the area. Repairs must be completed within six months and not to exceed 50% of the after improved appraised value.
As part of Fannie Mae’s Housing Stabilization efforts their policy remains in effect and encourages experienced investors play a key role in the housing recovery by continuing to offer renovation lending tools to the property investor community with its HomeStyle Renovation Loan Programs.
If you’re a real estate investor looking for a lending tool to renovate and create a nice portfolio, consider the