Freddie Mac CHOICERenovation mortgage.

[Matt Mcnulty]

Anyone have thoughts, good or bad, on this new offering.

[Andrew Postell]

@Matt Mcnulty @Wei Jie Yang this product is somewhat similar to the Fannie Mae HomeStyle loan.  With any product there are "pros" and "cons" to them.

In general, these loan types are good if you already own a property.  They aren't such good products if you need to close quickly.  Here's a quick breakdown of what's good and bad:

Good

No need to refinance - they are 30 year fixed rate loans

Low closing costs and rate - about 1/2 the rates and fees of Hard Money

Bad

"Slower" Closing times - 45 days is about what you should expect.  Which makes most of what we do totally impractical to use these loans to use with purchasing a property.  If someone is facing foreclosure, this product is completely out.

ALWAYS needing a downpayment - some loans that we as investors have options for will lend UP TO a certain percentage of the "After Repair Value" (ARV). So if you can purchase and rehab at 75%, some loans won't need ANY downpayment from us (at least in theory). With the Fannie/Freddie loans they will ALWAYS need at least 15% down even if you purchase and rehab at 75% or below. So some loans will actually help you in keeping more cash in your pocket. I hope this is making sense.

Paperwork - And with all Fannie/Freddie loans there will be a lot of paperwork and compliance.  All contractors will need to complete paperwork and depending on your state, they might even be needed to sign at closing.

I hope this brief explanation helps in some way of understanding what these loans offer.  Feel free to ask anything additional if needed.  Thanks!