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HomeStyle Renovation vs FHA 203K

How do the home improvement loans "HomeStyle Renovation" and "FHA 203k" compare side by side? If you're searching out this answer, then you're already familiar with the idea of renovation mortgages. The video below compares these two well-known options for financing a fixer-upper home purchase (or refinance). After the video we'll also take a look at some of the facts in a chart for you, so you're well-equipped to make the right decision for your home buying situation.

 

Download the Ultimate Guide to Renovation Loans here and learn more about all your renovation options.

See the embedded file here - HomeStyle Renovation vs FHA 203K 

 

Video description: Dan Moyle with AmeriFirst Home Mortgage sits down with renovation lending expert Joe Daly to discuss the difference between the FHA 203k and HomeStyle.

The Full 203k has a minimum repair budget of $5,000 and covers structural repairs like sill plate replacement (often due to termite damage). FHA 203k has a small down payment 3 1/2% and has mortgage insurance for the life of the loan.

Guy_BuildingHomeStyle is a loan product for conventional home buyers either with or without mortgage insurance who want to make some home improvements and upgrades, renovations or repairs roll the cost of repairs into the mortgage and still use a conventional type product. HomeStyle requires 10% down, with a maximum of no more than 50% of the as completed value. It does not require the home to be owner occupant, but an owner occupant can buy a home that's a 1, 2, 3 or 4 unit, also investors could buy using HomeStyle which is a 20% down here at AmeriFirst Home Mortgage. You can also use HomeStyle for a second home, which FHA 203k doesn't allow, same 10% down on a second home.

 

As you can see, much of the decision on which renovation mortgage to choose rests on your end goals. If you're looking to buy a house as an investment property and not live in it, you simply won't be able to use the FHA 203k to buy it. But if you're looking to only put a 3.5% down payment on a home, then HomeStyle isn't your option. 

Below is a simple chart that lays out a few of these comparison facts out for you. It's meant as a simple guide. You should talk to a mortgage consultant for a more detailed look at your options.

 

  FHA 203k HomeStyle Renovation
Loan Type Purchase/Refinance Purchase/Refinance
Property Type Most residential properties  Most residential properties 
1-4 Unit Primary Residence  Yes  Yes
1-Unit Investment Properties  No  Yes
Minimum Down Payment  3.5% of total acquisition (sale price + renovation cost)  5% with management approval; 10% for most primary & second homs; 20% for investment property
Mortgage Insurance (MI) Required  Yes  Down payments less than 20% and loan-to-values of more than 80% on refinance
Maximum Renovation Amounts No max as long as mortgage amount is within county guidelines for FHA Loans 50% of the as-completed value 

 

 

You can learn more about these renovation mortgage options and others in our free ebook "The Ultimate Guide to Renovation Loans" at the button below. Download your copy today - which includes a handy "renovation mortgage comparison" chart with several options for financing your remodeling projects.

 

Ultimate Guide to Renovation Loans

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5 Reasons Not to Skip Your Home Inspection

You found a house you love—hooray! But with lots of other buyers breathing down your neck, you feel like you need to act fast. To make your offer more attractive to the seller, you might be tempted to skip your home inspection, but here are five good reasons not to! 1.) Not all problems are obvious. It’s easy to spot issues like a crack in the sink or a broken light fixture. But do you know how to recognize foundation problems, termite infestations, outdated wiring, or sewer system problems? Trained home inspectors do and taking the time to have them go over the entire property before you sign the papers can prevent you from buying a headache instead of a home. BOTTOM LINE: The great thing about an inspection is that if you see major problems you’re unwilling to take on, you can change your mind and walk away. 2.) You may not be able to afford the repairs. If you’re like many new homeowners, you may not have much set aside to pay for needed repairs after saving up for your down payment and closing costs. While you may not mind waiting a bit to repaint or update appliances, waiting on problems like leaky roofs, broken plumbing, or infestations will only make them worse, and some issues, like broken furnaces, may need to be repaired right away. BOTTON LINE: You don’t want to go deep into debt to keep your home safe and comfortable. Instead, it’s worth negotiating with the seller to pay for repairs. If they refuse, you can simply walk away. 3. Some problems can make it harder to insure the home. Getting home insurance is essential because lenders need to see an insurance policy before you can close on your home—and of course, you’ll want to have your home protected in case anything goes wrong. However, some companies may decide that your home’s older electrical systems, plumbing, or building materials make it too risky to insure. BOTTON LINE: If essential updates are needed, the only choices are to ask the seller to pay for them, pay for them yourself if you can afford it, or walk away from the deal. 4. Serious issues can affect the resale value of the home. Your home is probably the biggest investment you will ever make. However, if it has major problems, instead of building your wealth, it could turn into a lousy investment that threatens your financial well-being. BOTTON LINE: While a home inspection typically costs a few hundred dollars, it’s an excellent investment in your peace of mind and financial health. 5. Some problems can threaten your family’s health or even your life. This sounds scary, but it’s no exaggeration. Issues like lead paint, black mold, radon (an odorless radioactive gas), or carbon monoxide leaks can cause serious and sometimes fatal health problems. BOTTON LINE: These issues are also easy to miss without a professional home inspection, and it’s simply not worth taking the risk. While it’s not easy to compete with other buyers who are bidding for the house you want, home inspections are one area where you don’t want to cut corners. To protect your physical, financial, and mental health, there’s no substitute for a professional home inspection.

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Let's Talk FHA Loans

  If apartment living is getting old, or you've outgrown your parents' basement and house rules, you may be thinking about buying your own place. For this reason, you may be interested in learning about home loans that offer low and no-down payment options and have flexible lending requirements. One of these is the FHA loan. Let's take a closer look. 

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