About Fannie Mae's HomePath Financing

Posted by on Thursday, December 23rd, 2010 at 2:54pm.


By Tim Ryan

For many people, obtaining a home mortgage in a market of tighter lending policies can be a problem. Even for those who have good credit scores, mortgage lenders are now requiring borrowers to place larger down payments, obtain Private Mortgage Insurance (PMI) on mortgages that have a loan balance that is greater than 80% of the home’s value as well as cover the usual closing costs. Fortunately, Fannie Mae now offers a program called HomePath Mortgage Financing that is structured to assist people in purchasing a home without burdensome upfront costs. For those who qualify, a HomePath mortgage offers many benefits that cannot be found in other mortgage programs.Fannie Mae HomePath Mortgage

The HomePath program was designed to support the sale of foreclosed homes owned by Fannie Mae. A HomePath mortgage can only be used to purchase one of these foreclosed homes. These loans are offered in two types that can be based on fixed-rate, adjustable-rate or interest-only terms. One is a traditional mortgage, and the other is a renovation mortgage that allows for light renovations to a home that can be included into the loan. For both types, the overall qualifications of these loans are very flexible in the following ways.

Lower Credit Scores: Even those with less than perfect credit may qualify for a HomePath mortgage. A lower credit score does require at least an 80% loan-to-value ratio, but this ratio can often be increased through the support of the seller or through a grant/aid program.

Lower Down Payment: A HomePath mortgage requires only a 3% down payment that can be generated from a wide variety of sources. The down payment can be funded directly from the buyer, through a gift, a grant, an employer or through loans offered by non-profit, state and other governmental entities.

No PMI: With a HomePath mortgage, no PMI is required even if the loan balance is greater than 80% of the home's value. This can save several hundred dollars in the overall cost of the loan.

No Appraisal Fees: As opposed to most mortgages, HomePath loans requires no appraisals to determine a home's value. Instead, the loan will be based on the sales price a buyer negotiates with Fannie Mae.

At first, this new program was rarely used.  However, in recent months buyers have had a peaked interest because of the fifteen day ‘First Look’ period which entitles only a full-time resident to place an offer.  Investors and part time residents must wait for the initial fifteen day period to pass before placing an offer on one of these Naples homes.  There is a clearer understanding of what HomePath offers and so many new buyers are utilizing this great opportunity.  Properties offered through this program can be found nationwide through real estate brokers that are qualified as Fannie Mae listing agents

6 Responses to "About Fannie Mae's HomePath Financing"

Toby Lane wrote: Great Article Tim. One other aspect of this loan that the consumer needs to be aware of, is pricing. When someone is obtaining HomePath financing there are adjustments based on the Loan-To-Value. For example, 95.01-97% LTV will require 3.625% in discount points. On a $200,000 loan, this is $7,250 out of pocket from the buyer! 90.01-95% is 2.5% in discount points and so on. A borrower may be able to have some of this absorbed into the rate, but they need to be aware pricing will be higher. There may also be adjustments for credit scores, etc. Ask your lender how the adjustments will effect you.

Posted on Monday, December 27th, 2010 at 1:29pm.

short sales in california wrote: The largest public employee pension fund in the United States is CalPERS. CalPERS has approximately 8 billion worth of assets. CalPERS suspended the program that offered assistance and mortgage to CalPERS members. This decision was taken as the organization observed that the members are no longer taking interest in the home loan program. This was leading to increasing costs and risks in maintaining the program. George Diehr is Chair of theCalPERS Investment Committee. He said that this change allowed them to reallocate their resources and manage to reduce the risk to the Fund.

Posted on Wednesday, December 29th, 2010 at 8:35am.

Philippine real estate wrote: Thanks for the Article. Fannie Mae can really help for those who want to own house this time. But hope to see it works without any risk of fund.

Posted on Thursday, January 6th, 2011 at 11:09am.

Lisa Udy wrote: Thanks for the information Tim. :) I had no idea, now I need to do some homework.

Posted on Sunday, January 30th, 2011 at 11:56am.

Bayut wrote: Well, I have visited the site suggested in the article and I have liked it a lot. Your article also has a great stuff and I have now come to know about all the terms mentioned in the article. Thanks for the information.

Posted on Wednesday, April 27th, 2011 at 10:09pm.

Bill Gassett wrote: Tim you did a nice job with this article. The home path program has been a real success.

Posted on Tuesday, December 27th, 2011 at 6:51am.

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