Sometimes choosing between the two FHA 203k loan options can be confusing and we are often asked “why would someone want an FHA 203k Streamline loan vs. a FHA 203k “regular” loan? And the simple answer that we usually give is: if the cost of repairs is anywhere close to the $35,000 allowed by FHA for the FHA 203k streamline program, go with the streamline.

If it is much, much more than that – you will need to pick the “regular” FHA 203k loan program.

But the answer is really slightly more in-depth than that — and here are just a few other reasons people choose the FHA 203k streamline loan program:

• Architectural exhibits are not required with the FHA 203k streamline
• The lender is responsible for making sure the cost to repair is reasonable
• General contractors and/or consultants are not required
• Some lenders don’t require that you get at least $5,000 in repairs (some do)

If it is clear that you are going to need more than $35,000 to rehab a house, then you will want to go with the “regular” FHA 203k program, but it is much more time intensive and the requirements are more stringent. From what we have seen, in most cases, the $35,000 for repairs is more than enough – which makes choosing the FHA 203k streamline an easy choice.

One of the benefits of the HomePath mortgage is that there is that no appraisal is required by the lender in order to be approved for the loan.

When buying a home from Fannie Mae using a HomePath mortgage loan program, an appraisal is not required. The property value is determined by the sales price.

Even though the property value is determined by the sales price, many people still are getting inspections – and even getting appraisals, even though it is not required by the lender. Fannie Mae agrees is essentially agreeing to loan money on the property in as-is condition, and since they are the seller on these properties, no appraisal is required.

In the event that you want to get an appraisal – lenders have set up some basic rules:

• You must order the appraisal from an appraiser of your choosing – not one that is recommended by the lender.  This is key with the new HVCC rules.
• The appraiser must be paid for his services outside of the transaction – it cannot be financed into the loan.
• The lender cannot request a copy of the appraisal. If the borrower provides a copy to the lender, it must be included in the loan file with a note that the appraisal was ordered by the borrower outside of the loan transaction and was not reviewed or approved by the lender.
• The property value reflected in the appraisal will not impact the LTV calculation for the loan.
• The lender must inform the borrower that the purpose of the borrower ordered appraisal and its contents are for the use and information of the borrower only and will not be considered for purposes of the loan transaction.

These rules essentially state: if you order an appraisal, you are on your own and it has nothing to do with the loan itself.

Do people really order appraisals when getting a HomePath mortgage loan? Not that I have seen, but it must happen or we wouldn’t have lenders setting out rules for it!

With the HomePath mortgage, no appraisal is required, but with the HomePath renovation mortgage, an appraisal is required.

That said, just because no appraisal is required on the HomePath mortgage program doesn’t mean that people won’t want to order one from time to time for their own piece of mind.

For the HomePath mortgage loan program, an appraisal is not required. The value of the property is determined by the contract sales price.

If for whatever reason you want to order an appraisal for the HomePath loan program, these rules apply:

• You must order the appraisal from an appraiser of your choosing – not one that is recommended by the lender.
• The appraiser must be paid for his services outside of the transaction – it cannot be financed into the loan.
• The lender cannot request a copy of the appraisal. If the borrower provides a copy to the lender, it must be included in the loan file with a note that the appraisal was ordered by the borrower outside of the loan transaction and was not reviewed or approved by the lender.
• The property value reflected in the appraisal will not impact the LTV calculation for the loan.
• The lender must inform the borrower that the purpose of the borrower ordered appraisal and its contents are for the use and information of the borrower only and will not be considered for purposes of the loan transaction.

Do people really order appraisals when getting a HomePath mortgage loan? I personally haven’t seen it yet, but I am sure it happens. Thinking about ordering an appraisal for your HomePath mortgage? Now you at least know the rules – and you are on your own!