HomePath Renovation Loan

Are you interested in a residential property known as a fixer-upper? These are homes that need some form of renovation in order to be lived in. There are benefits to these types of homes, for example you can usually get them for a lower price because there is work that needs to be done to the structure. There is a program called a HomePath renovation loan that lets you buy such a home, and includes not only the cost for the home but also the cost for the renovations up to 35 percent of the value and not exceeding $35,000.

There are some clear advantages to this type of loan. One is that they require a lower down payment than the average home that does not need renovation. And, the down payment can be paid for by a grant, a loan from a non-profit organization, an employer, the government, a gift or of course through a traditional lending facility. This type of loan also offers different mortgage types, adjustable and fixed. An adjustable rate mortgage, or ARM, is a mortgage with payments that fluctuate according to the state of the housing market. A fixed rate mortgage offers the same payments with no fluctuation regardless of the market.

Adjustable rate mortgages can be appealing for first time homebuyers because the initial rate can be lower than a fixed rate mortgage, and easier to acquire for those with less than perfect credit. If your credit improves in the future or if the housing market improves and interest rates drop you can refinance and change to a fixed mortgage. Refinancing also allows you to change the term of your mortgage, whether you want a longer term to reduce monthly payments or a shorter term to build equity faster and pay your home off more quickly.

With a HomePath renovation loan the amount of appraisal is based on the completed value which would be after renovations are completed. Your lender can also tell you about loans that do not require you to have mortgage insurance. And, you can get assistance with closing costs from the seller. HomePath renovation loans are available for primary homes as well as investments and vacation properties. With condominiums many of the requirements can be waived, which is something else your lender can tell you about.

Many homes owned by Fannie Mae are usually eligible for this type of renovation loan. Fannie Mae sells bank foreclosed home and the only type of renovation loan they offer on their homes is the HomePath Renovation Loan. Fannie Mae is officially called the Federal National Mortgage Association, and was first founded in 1938 by the United States Congress. Although backing by the U.S. government is not fully guaranteed this program is looked upon favorably as a low-risk loan option by mortgage lenders and has many advantages especially for first time buyers.

So, if you are a first time homebuyer who wants to purchase a home that needs fixing up, a HomePath renovation loan may be perfect for you. Combined with a Fannie Mae mortgage, you can get a reasonable interest rate on your desired home and have the opportunity to purchase a home at a good price that may need a few upgrades. There are benefits to this besides the original price, as renovated homes can appreciate in value and if you ever want to sell you may get far more than what you originally paid for the home. By doing your own research on this subject and speaking with mortgage lending professionals you can learn more about these renovation loans and the Fannie Mae program.