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Your Chicago Area FHA 203K Renovation Loan Resource

Peter Thompson - Illinois Mortgage Broker
Illinois Mortgage Broker
Peter Thompson

Prospect Mortgage
NMLS # 283204
Direct: 331-333-7093
Cell: (630) 479-6424
Fax: 877-773-1476
1717 Naper Blvd., Suite 300
Naperville, IL 60563
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Archive for the 'Homepath' Category

Chicago Area Homepath Renovation Loans – Financing for Purchase and Repairs for Fannie Mae Foreclosures

6th May 2011

One of the best kept secrets for many real estate agents, home buyers and investors, is the Homepath Chicago area HomePath Renovation mortgage, Homepath renovation mortgages in the Chicago arealoan. This is a type of mortgage specifically for purchasing Fannie Mae foreclosed homes, and there are  some great advantages to buying with this program. These foreclosures are priced right from the start, you can buy with a low down payment (3% down for owner occupants and 15% down for investors) and there is no mortgage insurance. Now we have a new type of Homepath loan, the Homepath Renovation loan. This mortgage allows buyers to purchase a Fannie Mae foreclosure and add the cost of repairs and improvements into one loan, with one closing. The biggest problem when buying a foreclosure is often that the home needs work, either repairs immediately, or deferred maintenance. This mortgage is modeled after the Streamlined FHA 203k, and the Homepath Renovation loan allows you to add these repairs into your mortgage, and you can also include other improvements to make the home the way you want it to be.

Some of the features for this loan include:

  • Available for eligible Fannie Mae foreclosures as listed on Homepath.com.
  • 3% down payment available for owner occupied buyers.
  • 15% down payment for investors (2 –4 units require a higher down payment).
  • Available for 1-4 units, condos and townhomes.
  • The mortgage is available as 30 year fixed, 15 year fixed and 5 year adjustable mortgages, so there is flexibility in how you can structure your financing.
  • There is no mortgage insurance on these loans (There are however pricing adjustments for this. You can either build this into the rate or pay to buy for it at closing – you can use seller credits to pay for this.)
  • You can ask for up to 6% of the sale price as a seller credit for owner occupants, and 2% is allowed for investors.
  • Unlike the regular Homepath mortgage, a full “as-completed” appraisal is required.

 

Here are the steps of a Homepath renovation Mortgage from start through the completion of the work:

  1. Find the property and choose your lender.
  2. Decide exactly what work needs to be done, and work with your lender to come up with an estimate of how much it will cost.
  3. Apply for the mortgage so we can get the credit approval as quickly as possible.
  4. Get bids for the work that needs to be done, and pick the contractor you want to work with.
  5. Have your contractor work with your lender to submit the contractor approval package and make sure the bids are put together correctly.
  6. Once we have the credit approval and the contractors bid and package, we will order the appraisal (showing value after all the work is completed).
  7. Once the appraisal is in, this, along with any other needed documentation, is submitted for the full loan approval.
  8. You close on the loan and now own the home.
  9. At Prospect, 5-7 business days after closing you will receive 50% of the funds so you can start the work (this comes in a check made out to you and the contractor).
  10. The contractor must start the project within 30 days and must complete it within 6 months. 
  11. When the work is completed the contractor signs a lien release, the borrower signs a statement showing the work has been completed and a final inspection and title update are done.
  12. The balance of the funds are released in a two party check to the contractor and the borrower.
  13. If there is any money left over after all the work is done it will be applied to the principal balance of the mortgage.

Homepath Renovation loans are a great way to buy a home and fix it up at the same time, but it is a very specialized loan. There are only a few lenders able to do them here in Illinois, my company, Prospect Mortgage is one of them. Make sure you work with a loan officer who is certified to work with renovation financing as there are a lot more moving parts and you want someone who can help you navigate through the approval process. Let me know what I can do to help you.

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