Have you fallen in love with a home that won’t pass Fannie Mae standards for financing? Maybe it needs some renovations to bring it up to code. If you don’t have the cash lying around to pay for the home, you may think you’re out of luck.
There is a program that can help you and it’s a Fannie Mae product. It’s the Fannie Mae HomeStyle loan. This first mortgage program provides funds to buy a home as well as renovate it. It’s like having your cake and eating it too.
You can borrow money to make renovations that can be completed within 12 months. You’ll need at least a 3% down payment on the future value of the property. In other words, you should base your down payment on the value of the home after renovations. You’ll need a decent credit score and your debt ratio shouldn’t exceed 43%.
Assuming you qualify, your first step will be to find Homestyle loan lenders. Just how do you do that?
CHECK WITH LOCAL LENDERS
Try checking with your local lenders before taking your search anywhere else. You’ll want to stick with the smaller lenders, rather than the large branches that you can find nationwide. Your smaller branches often tend to offer niche products, which the HomeStyle loan is – it caters to those buying homes that would otherwise be ineligible for any type of financing.
Your larger banks often stick to the ‘common’ loans, such as the conventional and FHA loans. They like borrowers with high credit scores and low debt ratios. They don’t want to mess with homes that aren’t ready for an appraisal or that need renovations before any can live in it.
Trying the smaller banks that offer either the HomeStyle loan or portfolio loans will give you a better shot at finding the loan you need.
TRY MORTGAGE BROKERS
If your local banks don’t leave you with ay options, see if a mortgage broker can help you. They don’t write loans or fund them. Instead, they work with a large number of lenders, matching them up with the right borrowers. This can give you a further reach into the community and possibly help you find lenders that you wouldn’t have found on your own.
Mortgage brokers have a large number of lenders and programs at their disposal. They know how to match borrowers with the lenders that offer what they need. It’s like applying with hundreds of lenders without actually doing so. You don’t have to do any of the legwork, either. The broker does everything. All you have to do is complete one loan application with the broker and they do the rest.
USE THE INTERNET TO YOUR ADVANTAGED
Finally, you can use the internet to find mortgage lenders in all 50 states. Some lenders are licensed in all 50 states, but they may not advertise in your state specifically. Doing a little online research can help you find the lenders offering the HomeStyle loan.
When you shop online, you can try as many lenders as you see fit. As long as you apply for your loans within a short period of time, your credit score is only hit with one inquiry. This means you won’t lose a lot of points on your credit score just because you applied for loans with various lenders.
Finding a HomeStyle lender can be a complicated process, but it’s possible to find the perfect lender with a little work. If you don’t want to do the work yourself, consider a mortgage broker. If you can handle the work, start shopping local and then nationwide to find the Fannie Mae approved lender that offers HomeStyle loans too.