Fannie Mae Home Style Renovation Mortgage
This mortgage is for rental properties and house flips. It has an extremely low down-payment, provides money for renovations, low interest rates, and is a fixed 30 year loan. You can use the property as a residence, rental, or even a vacation home. As a personal home you can get a loan on a single-family house, duplex, triplex, or quad. As an investment loan you can only qualify with a single family home but there are many opportunities there.
The Fannie Mae Home Style Renovation Mortgage is a traditional loan which means that not everyone will qualify. Investors that do not qualify for a conventional loan might be able to flip the property to someone who does qualify by introducing Fannie Mae to them.
It’s a Great Time to Buy
It’s a Great Time o Invest
Market inventory is at an all time low. There are fewer houses for sale on the market than ever before. As a result, buyers are dropping their standards, in a desperate attempt to find a home. People are buying older houses that are in need of work because there is nothing else available. This loan can help you flip those properties without having to renovate them.
Secondary Loan Market
This loan is through Fannie Mae because they buy it on the secondary mortgage market. Many different banks and financial institutions can originate the loan and then sell it to Fannie Mae. This loan has many options that provide a huge amount of flexibility for investors.
This loan gives you money needed to renovate properties. The money is put into a reserve and drawn out over time. You can hire contractors and submit costs or even do the work yourself.
Interest rates for this loan are the same as the current market interest rates of 4%. The Fannie Mae Renovation loan also
Hard Money Loans
Hard money loans are another option for people that do not qualify for a conventional loan. They will potentially fund renovations, but their interest rates can be as high as 14%.
If you are purchasing a home as a primary residence, you can qualify for as little as 0% down. The loan will qualify you for 5% down and there are programs available through a separate organization can can pay that 5% down. If you would like to learn more, ask a mortgage broker in your area.
Even if you are an investor who is not looking for a primary residence, this could be an interesting strategy. If you own a home, you could cash-flow greatly by turning that residence into a rental. You could then find another home at a great price, with 0% down as your primary residence.
The current tax laws allow you to resell a house as a primary residence every two years with tax free gains. This means that if you were to purchase, renovate, and live in a home for two years you could then sell it and keep any profits you made tax free.
Investment Property Loan
The Fannie Mae Home Style Renovation Mortgage requires a higher down-payment on investment property loans. You could be required to put as much as 15% down, but that is still less than the typical 20-30% most other loans offer.
One of the best things about the Fannie Mae Home Style Renovation Mortgage is how flexible it is with the types of properties it can be used for. Primary residence loans can be used on single-family homes, duplexes, triplexes, or even quads. Investment property loans can only be single-family homes, but they can be used on vacation homes, rentals, or rent-to-owns.
FHA 203(k) Loan
Another option is a U.S. Government loan called the FHA 203(k). This loan is often chosen over the Fannie Mae Home Style Renovation Mortgage, because it has less underwriting restrictions. It is only for primary residences and is perfect for someone who does not qualify for the other loan.
Flipping a Loan
Fannie Mae has title seasoning which means they do not have strong restrictions on how long you have been on a title but the FHA loan requires you to be on the title for 90 days before you can resell. There are less underwriting restrictions on debt to income ratio qualifications with the FHA loan, but the Fannie Mae loan is more flexible.
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