While renovating a home can seem tiresome and time consuming, the loan process shouldn’t be! When you use Fannie Mae’s HomeStyle Renovation Loan, you are using a product that will be closed in three simple phases.
Phase One: Review Plans and Loan Preparation
- Reviewing homestyle loan terms and fees.
- Borrower works with contractor and in most cases a HUD consultant to submit renovation plans to lender.
- Appraiser reviews plans and determines “as-compared” value.
- Lender uses Maximum Mortgage Worksheet (form 1035) to determine mortgage amount.
Phase Two: Manage Funds Through Renovation
- Lender sells loan to Fannie Mae*.
- *Must be an approved HomeStyle Renovation Lender to sell loan prior to project completion.
- Lender places funds in a custodial account.
- Contractor begins work and submits requests for funds.
- Lender manages draws based on inspections.
Phase Three: Finalize Loan Completion
- Lender orders final inspection.
- Title company updates title policy (completion materials).
- Lender finalizes and submits completion materials and certificate of occupancy to Fannie Mae.
- Lender removes recourse (if sold prior to construction completion) or sells loan to Fannie Mae.