Buying a Salt Lake City Home with a Homepath Renovation Loanadmin
If you are a first-time homeowner, getting a great deal can make the difference between affording the house you want right now or waiting years to trade up the equity ladder. Fortunately, not only are there discounts to be found in the Salt Lake real estate market — there is a loan that allows you to roll the renovation costs of that discounted property straight into your mortgage. If you don’t mind purchasing a home that requires light to moderate renovation, and you want a house that is designed to your specification, the Fannie Mae Homepath Program may be right for you.
The Fannie Mae Homepath Program
Designed to help neighborhoods adversely affected by the recent housing crisis, the Homepath Program consists exclusively of foreclosed properties owned by Fannie Mae. The properties are sold for below current market value. You can purchase a Homepath property for your own personal residence, or as a second home or investment. Various properties are eligible, including single family homes, condominiums, planned unit developments, co-ops, and 2-4 unit buildings.
The Homepath Renovation Loan
Homepath Renovation Loans allow you to finance up to 35 percent of the property — based on its appraised value once the renovations are completed — or a total of no more than $35,000. The program does not distinguish between necessary and cosmetic repairs. Thus, homeowners can use the loan either to repair a cracked floor in the shower or to knock out a wall to create an open-plan kitchen.
In addition to that element of flexibility, there are several other advantageous features of this loan:
- Buyers can choose either a fixed- or adjustable-rate mortgage.
- The down payment is as low as five percent.
- There is no mortgage insurance.
- Seller credits for closing costs are allowed.
In exchange for these advantages, there is a fairly detailed process to get approval for a Homepath Renovation Loan:
- You have to identify a property, and the contractor who will undertake the renovations.
- Need to verify that the property is eligible under the Homepath Progam before they can prequalify you for the loan
- You must submit the contractor’s plans to the lender.
- An appraiser determines the value of the property once the renovation is finished.
- I calculate the maximum renovation and loan value.
Once these steps have been successfully completed, the loan is ready to close. Your contractor has six months from closing to complete the renovation. Meanwhile, the funds sit with the lender in an escrow account and will be released directly to the contractor only once the completed work has been inspected.
Navigating the Fannie Mae Homepath process can be a bit tricky, so it’s good to have a seasoned mortgage professional like myself helping you at every step of the process. For a bit of extra effort, though, you stand to gain considerably. First, you will get a home at below market value, allowing you to extend your purchasing power. Second, you will be able to personalize your first home without being forced to wait until you can afford to make renovations.
For a Salt Lake City Homepath Loan Call Anthony VanDyke, President of ALV Mortgage, at 801-206-4343