Financing it All: Renovations and Purchase Price
Most homebuyers today look at a number of homes in their search for the house that is just right for them. Of course, few homes turn out to be the perfect home without at least some minor renovations and modifications. In some cases, making the home you just purchased the right home for you could mean making extensive, and often expensive, renovations. Since most new homeowners are already out extensive funding due to closing costs and down payments, this makes it incredibly difficult to fund renovations necessary to make an ‘okay’ home a dream home.
New mortgage options; however, are making it much easier to convert a new home purchase into the perfect home without taking waiting until you can afford it, taking out a second loan, or running up the credit cards in order to fund renovations. One such option is the HomeStyle Standard Mortgage Loan, available through Fannie Mae.
Many homeowners are aware of the advantages available through Fannie Mae mortgage loans, including the ability to make lower down payments. Other options, such as the HomeStyle mortgage loan; however, can make it even easier to purchase if not the home of your dreams, to at least renovate the home you do purchase into something that more closely resembles the home of your dreams.
The HomeStyle Standard Mortgage allows homebuyers to finance the purchase of their home as well as the cost for improvements into one loan all at once. Up to 95% of the purchase price can be covered under the loan in addition to the cost of improvements. There are some limitations, but they aren’t extensive. For example, the loan can cover all of the cost of improvements or 95% of the value of the home after renovations; whichever is less. In addition, renovation cost cannot surpass 50% of the existing home’s value.
This gives homebuyers not only the ability to finance the purchase of their home and renovations all at once but also considerable tax advantages. Because the renovations are blended in with the cost of the home in the mortgage loan, they are able to deduct the interest payments on both, an option that isn’t possible if you finance the renovations separately using credit cards or other options.
Wider guidelines than many mortgage loans that are backed by the government allow a broader range of homebuyers to take advantage of this option. The HomeStyle Standard Mortgage is available to everyone regardless of income level. In addition, the HomeStyle mortgage can be used on single family homes up to $252,000
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