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Homestyle Renovation 

What is a Homestyle Renovation ?  

A HomeStyle Renovation loan is a type of mortgage offered by Fannie Mae that allows borrowers to finance both the purchase of a home and the cost of its renovation with a single loan. It’s designed for those looking to buy or refinance a home that requires repairs or improvements, and it can be used for a wide range of renovation projects.



Key Features of a HomeStyle Renovation Loan:

There are different types of renovation loans, including:  

1. Single Mortgage: You can combine the cost of the home and the renovation expenses into one loan, making it easier to manage payments and paperwork.

2. Wide Range of Renovations: Unlike some other renovation loans, HomeStyle allows for a broad range of improvements, including major structural changes, kitchen remodels, or even luxury upgrades. It can also be used for repairs and energy-efficient upgrades.

3. Flexible Financing: You can use a HomeStyle Renovation loan for a new home purchase or to refinance your existing mortgage. This flexibility makes it a versatile option for various situations.

 4. Loan Amount: The amount you can borrow is based on the lesser of the purchase price plus renovation costs or 95% of the appraised value of the property after renovations. For a refinance, it's based on the lesser of the current appraised value or 95% of the appraised value after renovations.

5. Eligibility:  : HomeStyle Renovation loans are available for primary residences, second homes, and investment properties. However, the extent of renovations might be limited based on the type of property.

6. Down Payment:  The minimum down payment is generally 5% for primary residences, though this can vary based on the borrower’s credit profile and property type.

7. Draws: Funds for renovations are typically disbursed in stages based on the completion of the work. This requires an approved contractor and a detailed renovation plan.

8. Contractor Requirements: HomeStyle Renovation loans often require that the work be done by a licensed and insured contractor. DIY projects may not always be allowed, depending on the complexity and scope of the work.


Benefits: 

  • Single Loan and Payment: Simplifies financing by combining home purchase and renovation costs. 
  • Versatile Renovation Options: Allows for extensive renovations, including both structural and cosmetic improvements. 
  • Potential for Increased Property Value: Renovations can enhance the value of your home, which may provide a higher return on investment. 

Qualifications for the Homestyle Renovation Loan: 

Typically follow regular conventional guidelines 

Summary 

Overall, the HomeStyle Renovation loan is a flexible and comprehensive option for financing both the purchase and improvement of a property, making it a good choice for buyers and homeowners looking to undertake significant renovation projects.