Posts Tagged ‘HomePath’

Fannie Mae paying closing costs on HomePath

April 13, 2011

Breaking news… starting April 12, 2011, Fannie Mae is paying 3.5% of the purchase price towards a buyers closing costs when the buyer purchases a HomePath eligible property.

Great!… but what is a HomePath property?

HomePath properties are Fannie Mae owned foreclosures. This plan to pay 3.5% of a buyers closing costs is designed to encourage qualified buyers to get into the market and purchase some of these foreclosed homes.

What does one need to do to qualify:

  • get prequalified for a loan (credit, income, down payment)
  • plan to reside in the home as one’s primary residence (closing cost incentive not eligible on investment property purchases)
  • close on the HomePath property on or before June 30, 2011

Starting from the day of this post, you have 6 weeks to find the property, and then another 4 weeks to close on the loan before the end of June. That is sufficient time, but not a ton of time. Also like other credits and incentives, the closer we get to the end date, the busier things tend to get.

In other words, start early! To get started, contact me to be prequalified to buy a home as long as the property is in the state of Georgia. The next step would be to find a home, and you can search for HomePath properties at https://www.homepath.com/

Free money to your closing costs! How can one go wrong with that!?!

Contingency Reserve Requirements on Renonvation Mortgages

March 15, 2011

I’m staying with the “renovation” theme from my last several posts. This week I want to address a common question I get regarding one of the requirements on the Fannie Mae HomeStyle Renovation Mortgage, Fannie Mae HomePath Renovation Mortgage, and the FHA 203k Mortgage… “Why do these programs require a 10% contingency reserve?

The first thing I should do is define a contingency reserve. Fannie Mae and HUD (FHA loans) require a 10% contingency reserve on these renovation mortgages for unforeseen costs associated with the project.

The last thing anyone wants is to get into a renovation project on a tight budget with no additional assets and an unexpected problem occurs. Some potential issues that arise during a renovation cannot really be accounted for until the process is underway. That is why the 10% contingency requirement exists.

The contingency reserve is not an option. Since this is the case, a better question becomes “what happens to the 10% contingency reserve if it isn’t used?

As anyone who has gone through a renovation project on a home knows, most of the times costs end up going over budget, so it probably won’t be a problem. 🙂 In the event there are funds remaining, usually one of the following occurs with these three programs (203k, HomeStyle, HomePath):

  • additional work on the home – in some cases, the contingency reserve could be used to fund additional work on the home. If this isn’t allowed, then the other option is a…
  • principal reduction – the remaining funds are used to pay down the loan balance. Depending on the renovation program (and lender originating the loan), the borrower could request a recast of the mortgage. In other words, re-amortize the mortgage to lower the monthly payment
  • receive the contingency reserve as cash back – this is typically not an option for the borrower

Contingency reserves can be annoying, but they are definitely needed. As previously stated, the last thing anyone wants is to get near the end of the project and run out of money. What happens then? That is a scenario you never want to face!

Fannie Mae HomePath Renovation Mortgage

March 1, 2011

I know what you are thinking… “didn’t he recently write about the HomePath program?” Yes, I did recently put up a post about the Fannie Mae HomePath Mortgage program, but I didn’t mention anything about the Fannie Mae HomePath Renovation Mortgage. Think of the “renovation mortgage” as the sibling to the “mortgage.” Let me explain.

The HomePath Renovation Mortgage shares many of the same features of the HomePath Mortgage program:

  • available for primary residence, second homes and investment properties
  • need a minimum of 660+ credit score
  • only a 3% down payment required for primary residence (15% for investment properties)
  • no private mortgage insurance on the loan

The best part of this program is all of the $$$ a buyer can use to put some tender loving care into a home. There is no minimum repair cost associated with the Renovation Mortgage, and buyers can finance the lesser of 20% of the “after completion value” of the home OR up to $30,000.

To simplify things, for homes with an “after completion value” of $150,000 or more, the maximum renovation amount will always be $30,000. Any amount under $150,000 will be 20% of the value. One thing to keep in mind is the maximum renovation amount must include a 10% contingency reserve.

Let’s say you have $30,000 for renovations, what can you do:

  • unlike the FHA 203k streamline mortgage, structural repairs/additions can be made to a home. This means the buyer can knock out walls, add a room onto the home, etc.
  • luxury items such as swimming pools, hot-tubs, fences, etc. are allowed
  • renovations can include appliances
  • all renovations can be 100% cosmetic (no structural changes to the home), so new paint, carpet, tile, etc. is certainly a fine way to go too!

The Fannie Mae HomePath Renovation mortgage is a great way to purchase a home and make some repairs to it with no out of pocket costs to the buyer outside of the down payment on the loan.

Do remember that Fannie Mae designed this loan program to facilitate the sale of homes they own. In other words, they are foreclosed homes. There are numerous properties available, and they can be viewed here.

Those interested in making an offer on a home to use this rehab loan will need a prequalification letter, and that is something I can provide! If you are looking to get prequalified, learn more about interest rates for this program, total monthly payments, etc., feel free to call or email me. I would enjoy helping you through the mortgage process!

Fannie Mae HomePath Mortgage

February 8, 2011

About a year ago, Fannie Mae created this loan program to help sell properties they own. Most of these properties are foreclosures. When the program was initially rolled out, I threw up a blog post about the details. It has been a year, and some of the guidelines have loosened up… so it seemed like a good time to revisit this loan program.

The HomePath Mortgage program has some major selling points.

  • available for primary residence, second home, and investment purchases
  • borrowers only need a 3% down payment to get started
  • non-occupant co-borrowers are allowed with a 5% or greater down payment
  • allows for sellers to contribute up to 6% of the purchase price toward a buyer’s closing costs and prepaids (typical amount with less than a 10% down is only 3% toward contributions)
  • no appraisal is required
  • no private mortgage insurance will be on the loan regardless of the size of the down payment

Some of the changes that have occurred over the past twelve months include the qualifying credit score being lowered to 660 and investors now only need a 15% down payment to qualify. On all other conventional loan programs, investors need at least a 20%-25% down payment to get started. A requirement of only 15% down is a big deal in the investment purchase market.

Again, Fannie Mae designed this loan program to facilitate the sale of homes they own. There are numerous properties available, and you can search for them here. That being said, do proceed wisely. I’m not saying anything is wrong with the homes, but one should:

  • as with any home purchase, hire someone to do a thorough inspection of the home
  • since there is no appraisal required for the loan, I would ask your real estate agent to conduct research on the home against recent sales in the area to ensure the purchase price is a good deal for you
  • some of these homes will probably be classified as being purchased “as is,” so don’t expect the seller to do many (if any) repairs to the home prior to purchase

Anyone interested in making an offer on a home to take advantage of a loan program that doesn’t require an appraisal or private mortgage insurance will need a prequalification letter, and that is something I can assist in providing! If you are looking to get prequalified, learn more about interest rates for this program, total monthly payments, etc., feel free to call or email me. It would be my pleasure to help you through the mortgage process!

3% down and no PMI

April 22, 2010

Yes, you read that correctly. Conventional loan, 3% down, no private mortgage insurance, and to top it off… no appraisal required! The program is known as HomePath Mortgage by Fannie Mae and is available to borrowers looking for a primary residence OR an investment property.

Investors using the HomePath Mortgage program need a 15% down payment, but will not be required to get private mortgage insurance or an appraisal on the investment property. Also, the limit on the number of total properties financed in an investors name is waived.

Fannie Mae designed this loan program to facilitate the sale of their foreclosures. There are numerous properties available, and you can search for them here. However, before you find a home and get ready to submit an offer, remember this is a foreclosed property and there are some things to keep in mind:

  • the property is purchased “as is”
  • the property may require some repairs
  • definitely get an inspection!
  • no contingency offers (on the sale of a current home) allowed

All offers must include a prequalification letter. If you are looking to get prequalified, learn more about interest rates this program, total monthly payments, etc., feel free to call or email me. It would be glad to help you through the mortgage process!