It appears that the mortgage rate hikes have resulted in first-time buyers and others on tight budgets getting priced out of the market.
But there may be a way around this challenge.
Even though fixer homes aren’t as rock-bottom cheap as in the past, they can still present value to this pool of buyers.
And there are various loan programs that support the fixer home purchase. Let’s take a quick look at the two most popular: FHA’s 203(k) loan and Fannie Mae’s HomeStyle® Renovation Mortgage.
The FHA 203(k) Rehab Loan
If you haven’t had an opportunity to work with FHA rehab-loan buyers recently, there are a few changes you may not be familiar with.
The FHA 203(k) product, for instance, has new names for its two tiers:
- The 203(k) Full loan is now known as the 203(k) Standard.
- The 203k Streamline is now known as the 203k Limited.
Along with the new names came some small changes to each product. For instance, “Repairing or removing an in-ground swimming pool is allowed on both 203k Standard and 203K Limited loan programs with no dollar limitation as to bid amount,” according to the pros at Amerifirst Home Mortgage.
Other notable changes include:
- The 203(k) Standard now allows for foundation work to take place even when the home isn’t going to be razed.
- The Limited program now requires that the buyer submit a work plan wherein “… one or more contractors will provide the cost estimate or bids.”
Other changes were also made, and you can review them at Amerifirst Home Mortgage’s website.
Fannie Mae’s HomeStyle® Renovation Mortgage is a conventional loan backed by the GSE. The advantage this presents for your struggling clients is that “As a government agency, Fannie Mae exists to help make housing more affordable to mid- to low-income borrowers …” and those with “… poor credit histories and scores,” claims Lauren Bowling at Rocketmortgage.com.
This product is also ideal for those clients seeking a multi-unit home, such as a duplex, triplex, or quadplex, Bowling adds.
Naturally, there is a lot more to learn about these loan products, and you’ll find this information online at:
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