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.
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