Background: We are considering buying home listed for USD$199,000. It is rather outdated and the systems are - we think - original to the home, built in 1976. (I'm trying to get more disclosure from the owner but they're the original owner and the systems look pretty old.) Because of this, we are considering remodeling the home, possibly even before we move in. What we are envisioning includes knocking out an interior wall, redoing the bathrooms, and replacing two heat pumps, a furnace, and a sump pump. I did a little research and found the average cost for just replacing those systems would be about $18k. We are currently planning to pay for the remodel by withholding some of our $30k down payment but, in a search for alternatives, I came across the HomeStyle mortgage from Fannie Mae.
QUESTION: What is the HomeStyle mortgage from Fannie Mae, how does it work, and what are the advantages / disadvantages?
My Own Research: From what I've read through on Forbes.com, Interest.com, and Fannie Mae's own website (1, 2, 3), it seems like they're only good for people who want to buy a house but don't have the cash to cover both a down payment and the remodeling costs. Is that right? Given the numbers I gave, we probably couldn't replace the systems, do the structural remodels, and have a decent down payment. We can wait on the structural part if that's the a problem. What's the best long-term option?