Fannie Mae Homestyle and FHA 203K Loans Looking Attractive
In today’s United States real estate market, homes under $400k are in demand, and depending on your house location, you may not get a house in an updated condition in that price range. The lower you go down in price, the more questionable the shape of the house. Creativity can go a long way to the enhancement of the property condition deficit.
The right contractor can bring your creativity to into actuality to make the property worth its weight in equity. Most foreclosure, bank owned or home in short sale status can be valuable when you buy the property in its current condition then update the house to the most modern standards. In the past, most homebuyers avoided these deals and left it to the investor to purchase, but investors are having trouble with the high prices.
Usually, an investor would buy properties under foreclosure then fix up the property and sell it to a homebuyer at the repaired value. The prices of the foreclosure properties are getting too high for it to be profitable for the investor to buy these properties. The margin between the foreclosed price and the repaired price is getting too slim. Demand will indeed drive the price up but that works more for the homeowner who lives or holds the property for a few years or at least so the appraised value can catch up to the demand. Keeping the property for more than six months for a repair and flip is not beneficial to an investor.
Furthermore, the market seems geared to pushing Fannie Mae Homestyle Loan or FHA 203k loans. Fannie Mae and Freddie Mac in several cases are promoting homeownership by making their house deals available for 20 days only to buyers that will live at the house. If there are no bids from homebuyer that will occupy the home, then investors are allowed to bid on the house.
Most people in the past shied away from using FHA 203k insures because the amount of paperwork involved and in most cases, had to wait four months before the deal could be on its way. Using a Fannie Mae Homestyle Loan coupled with a HomeReadyTM loan sweeten the deal for homebuyers to buy a fixer-upper.
The HomeReadyTM loan allows you to add family members into the investment to help with qualification for the loan. With a credit score of around 680, you can qualify to make the loan possible with only 3 percent down payment. The Fannie Mae Homestyle loan is more flexible than 203k FHA because it is a conventional loan. Three months payments can be rolled into the loan so that you don’t start paying the mortgage until the property is habitable.
The program allows 140 days to complete the renovation on the house, and this is where the right contractor comes into fulfilling the deal. It makes good dollars and sense to get a fixer-upper house that you can make your home under these loan conditions.