HomePath Loans

homepath-loans

What is a HomePath Loan?

HomePath Mortgage is a financing program offered by Fannie Mae exclusively for Fannie Mae-owned properties.  HomePath offers a low 5% down payment with no lender required appraisal or mortgage insurance.   The loan program also allows expanded seller contributions for closing costs.

HomePath is available for primary and secondary residences as well as investments.  During the first 15 days a property is listed on HomePath.com only homebuyers who will occupy the property as their primary residence may bid and purchase.  This gives people looking for a new home a good window of time to make an offer before having to compete against investors.

Interest rates for HomePath tend to be 1% higher when compared to conventional and FHA loan rates.  Offering such a low down payment without the extra monthly mortgage insurance burden of FHA loans makes up for much of the difference.  This is especially true if taking into account the other saving such as closing cost contributions.

Fannie Mae began offering HomePath loans to help sell the influx of foreclosed properties they repossessed.  They do not want to be in the business of owning and managing properties so they designed HomePath to have streamlined mortgage requirements.   Having less barriers to qualifying for HomePath makes them more appealing to buyers getting the properties out of their hands quicker.

HomePath Renovation Mortgage Details

HomePath is not only offered for real estate that is move-in ready.  Some properties will need light to moderate renovations.  The HomePath Renovation Mortgage allows the homebuyer to bundle the funds for the home purchase and the renovation together into one loan.   The renovation portion of the loan is limited to 35% of the total loan and capped at $35,000.

HomePath Requirements, Do I Qualify?

First and foremost, to qualify for a HomePath Mortgage, Fannie Mae must own the property you are planning to purchase.  All eligible properties are listed on HomePath.com.  This smaller pool of real estate can make finding a desirable property in a specific area limited.   Homes must be bought through local real estate agents.  Fannie Mae will not accept offers directly from homebuyers.

As of November 2013 a HomePath Mortgage down payment has to be at least 5% down.  Beyond originating from an applicant’s savings, down payments may be gifted, from a grant, or even loaned from certain entities like nonprofits and employers.  There is no mortgage insurance requirement.  Applicants should expect to have a credit score at least 660 to qualify for 5% down.  People who have lower credit scores may still apply, but will need to place more money down to qualify.

HomePath Loan Tips

Since the smaller pools of available homes makes the best HomePath properties competitive, receiving a prequalification statement before negotiating an offer can be a good idea.  It is not a requirement by Fannie Mae to receive prequalification, but if one has the time and opportunity to go through the prequalification process with a lender it better positions them for negotiating an offer.   It also helps expedite the overall process regardless of the loan type.

Even though Fannie Mae waives the need to receive an appraisal or inspection it is a very important part of the home buying process. Knowing the value and condition of the property you are looking to buy can greatly affect your decision.  Knowing the cost of any needed repairs before you commit to purchasing a property is invaluable information and can prevent unwanted problems down the line.

Bottom Line

If you are buying a qualified Fannie Mae owned property and have a credit score of at least 660, a HomePath Loan can be the best mortgage you will find.  Its relatively affordable compared to the alternatives, fairly easy to qualify, and has many built inshort cuts to make the process quick and easy.  Paying approximately a percentage point higher interest than other loans is not positive, but the other savings mostly even it out. The biggest issue is limitations.  This loan product being exclusive to Fannie Mae owned properties means few option are available.  This makes finding a HomePath dream home hard to find.

Visit www.HomeSweetLender.com today to help you find and fund your dream home. 

 

 

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