There are changes to the HomePath program for both borrowers and buyers for people who buy a home from Fannie Mae using the HomePath prorgram.

Steve Ortiz from Academy Mortgage covers the basic incentives for the HomePath program here

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• Fannie Mae and Freddie Mac Incentives For HomePath Homes

In the Phoenix area, many homes are currently owned by Fannie Mae and Freddie Mac – and these homes are currently eligible for HomePath financing.

There are so many of these homes on Fannie and Freddie’s books that they are now offering special Fannie Mae and Freddie Mac incentives for both the buyer who wants to buy the property as their primary residence as well as the Realtor who represents the buyer.

The newly-announced Fannie Mae and Freddie Mac incentive programs are in addition to the already-attractive-financing-terms for the HomePath mortgage program for HomePath properties.

Fannie Mae Incentives

“To encourage the purchase of HomePath properties, Fannie Mae will offer a 3.5% buyer incentive from September 23rd to December 31st 2010.”

For anyone who wants to buy a property directly from Fannie Mae, you can now get up to 3.5% of the purchase price of the property that can be used for things like closing costs or buying a home warranty.

Fannie Mae and Freddie Mac Incentives: Eligibility

Not just anyone can qualify for these newly announced incentives – you must meet the following requirements:

• The sale of the property that is eligible for the HomePath financing program must close escrow on or before December 31, 2010 and within 60 days of offer acceptance.
• Buyers using Fannie Mae Incentives must plan on living in the property as an owner occupant.  No investment properties, second homes, etc can qualify for the Fannie Mae Incentives.  The owner occupant certification document is available on the HomePath Resources page of efanniemae.com.

As for the Realtor in the transaction – if you have helped a client get into a home that was owned by Fannie Mae or Freddie Mac, you can also qualify for special Fannie Mae Incentives if you have meet the criteria. Realtors who represent the buyers can receive a bonus of up to $1,500 as long as the offer was within the time frame allowed and the buyer of the home is buying it to be their primary residence.

Is this new Fannie Mae and Freddie Mac incentive enough to help them unload all of the homes they have in inventory? I don’t know for sure, but every little bit seems to help.

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• HomePath Incentives From Fannie Mae 2010

The headlines about this product are pretty sexy, aren’t they?  The Fannie Mae HomePath loan is one of the most aggressive financing options we’ve seen in quite a while.  This program is for purchasers of Fannie May owned properties and can be taken advantage of with primary residence, second home, and investor purchases.

I want to take a minute and go over some of the features, and then get into some details about them.  Think, “sizzle” first.  Then we’ll talk “meat and potatoes”.

Sizzle:

• As little as 3% down
• No mortgage insurance
• No appraisal required
• Owner Occupants AND Investors

Meat and Potatoes:

To keep this article from becoming too lengthy, I’m just going to go over these points as they pertain to a primary residence purchase.  If you want to discuss this in more detail, feel free to contact one of our Veracity Team members.

As Little as 3% Down

There are two Fannie Mae “products”, if you will, that down payment requirements will fall into.  Standard and Flex.  The standard minimum down payment requirement is going to be 5%.  The Flex feature will allow 3%.  The Flex program has two caveats.  Slightly higher credit score requirements and a slight adjustment to the interest rate pricing.

No Mortgage Insurance

This is one of the most attractive pieces of this program.  Low down payment AND no mortgage insurance?  Well, that is exactly right.  This, of course, is good for the buyer, but it increases the risk to Fannie Mae.  A higher loan to value without the safety net of private mortgage insurance will mean a greater risk to financial loss if the buyer were to default on the new mortgage.  Because of this, there is a slightly higher premium on interest rates for this product.  It is only nominal, but helps alleviate some of that new risk.

No Appraisal Required

This can be spun a couple of different ways.  The first positive is that it means less money for closing costs.  No appraisal means not having to pay for an appraisal.  A question that does come up often though is, “am I paying too much, if we don’t really have an appraisal to compare too?”.  That is a fair question, and one that you may want to lean on the advice of your Realtor.  Also, even though an appraisal isn’t required, you can still order one on your own.  This would have to be on your own, out of your own pocket, and without any assistance from the lender.

I think the “fair deal” rule will apply here, more often than not.  If you are looking at a Fannie Mae home, and plan on utilizing the HomePath program, it is tough to compare to another property as a comparable (unless it’s another HomePath property).  If the sales price, financing terms, etc., are acceptable to the buyer; and the Realtor has a favorable opinion of value, then it is likely a fair deal.

Owner Occupied and Investors Welcome

This product really sets itself apart from many other financing options in that it is 2nd home and investor friendly.  There are a few more pricing considerations, down payment requirements, and credit score criteria with these types of transactions, so please feel free to contact a member of The Veracity Team to go over specifics.

That covers the major components of the Fannie Mae HomePath loan.  Because of the many moving parts of this transaction, it is highly recommended that a prospective borrower go through the prequalification process to insure that they can get an accurate rate and cost quote.  The process is simple and easy.

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Getting a HomePath mortgage just got a little sweeter, as if it wasn’t already a good enough deal. Today Fannie Mae announced that people who use the HomePath mortgage program will get up to 3.5% of the purchase price to be used for closing costs or appliances.

From FannieMae.com

WASHINGTON, DC — Fannie Mae (FNM/NYSE) announced today that people purchasing a Fannie Mae-owned HomePath® property will receive up to 3.5 percent of the final sales price to be used toward closing cost assistance or their choice of appliances. The offer is available to any owner-occupant who closes on the purchase of a property listed on HomePath.com before May 1, 2010.

According to Terry Edwards, the Executive Vice President of Credit Portfolio Management at Fannie Mae:

“Attracting qualified buyers to the market and reducing the inventory of vacant homes is critical to stabilizing neighborhoods and helping the market recover. Many families are taking advantage of the federal homebuyer tax credit to buy a new home so this is a great time for Fannie Mae to offer some additional help, Homebuyers have the option to choose between financial assistance toward closing costs or new appliances for their home.”

Properties that are eligible for Fannie Mae to pay up to 3.5% of the closing costs can all be found on the HomePath official website where Fannie Mae gives detailed property information about each property including community and school information for the area as well as photographs and descriptions of the property.

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• FHA 203k Streamline or HomePath Renovation Loan: Which Is Best?

One of the more popular loan programs here in Arizona is the Fannie Mae HomePath Renovation Mortgage – due mostly to the number of homes that are currently owned by Fannie Mae and in order to qualify for a HomePath Renovation Mortgage, the home you are buying must be owned by Fannie Mae.

Since this loan program is gaining popularity, and it has a little bit different time line to it (similar to the Arizona FHA 203k streamline loan) here is a high-level overview of the process for people who are interested in possibly getting a HomePath Renovation mortgage. The length of time the lending process will vary, but there are generally five main factors that will determine how long it takes to get your loan closed.

HomePath Renovation Mortgage Process

1. Signed & Executed Sales Contract by Fannie Mae & Purchaser is received
2. Required application & documentation is returned to us
3. Completed Contractor Budget Documents to Appraiser
4. Completed Contractor Fannie Mae Construction Package
5. Completed Appraisal

The HomePath Renovation loan is a great loan for anyone who is considering buying a house that is currently owned by Fannie Mae and is in need of repairs before living in it. The process for a HomePath Renovation loan takes a little bit longer than a traditional loan, but not as much as you think.

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One of the great things about the HomePath Mortgage Loan program is that no appraisal is required by the lender in order to be approved for the loan. However; just because no appraisal is required, doesn’t mean that people won’t want to actually get an appraisal done so they can have the piece of mind that they are getting a good deal on the home they are buying.

For the HomePath mortgage loan program, an appraisal is not required. The value of the property is determined by the contract sales price.

But should you want to obtain an appraisal, here are the rules that will apply:

• You must order the appraisal from an appraiser of your choosing – not one that is recommended by the lender.
• The appraiser must be paid for his services outside of the transaction – it cannot be financed into the loan.
• The lender cannot request a copy of the appraisal. If the borrower provides a copy to the lender, it must be included in the loan file with a note that the appraisal was ordered by the borrower outside of the loan transaction and was not reviewed or approved by the lender.
• The property value reflected in the appraisal will not impact the LTV calculation for the loan.
• The lender must inform the borrower that the purpose of the borrower ordered appraisal and its contents are for the use and information of the borrower only and will not be considered for purposes of the loan transaction.

Do people really order appraisals when getting a HomePath mortgage loan? I haven’t seen it yet, but I am sure it happens. And if you are considering the HomePath program, now you at least know what the rules are regarding appraisals should you decide to order one… on your own of course.

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Many people seem to be interested in the Fannie Mae HomePath mortgage program, and one of the most popular questions people have is “how much do I have to have as a down payment?”

In mortgage-speak, how much money you put down when you buy a property is how you calculate what is called a loan-to-value ratio or also commonly referred to as LTV.

As an example, if the sales price of your new home is $100,000 and you put $5,000 down, the loan to value would be 95%.

With the HomePath mortgage loan program, the maximum loan to value allowed by the program depends on what kind of property it is (single family homes have different LTV restrictions than 4 plex’s for example).  Also maximum loan to value ratios are different if the property is going to be a primary residence, second home or investment property.

HomePath Mortgage Loan LTV Highlights:

Primary Residences

For a single family home that is going to be a primary residence the maximum LTV is 97% (note: this is 95% with some lenders) and require a 660 credit score.

For a fourplex that is going to be a primary residence, the maximum LTV is 75% and a minimum credit score of 580 is required.

HomePath Second Homes

For a second home that is a single family residence, the maximum LTV is 90% and a 660 credit score is required.

HomePath Investment Properties

For an investment property that is a single family residence, the maximum LTV is 90% and requires a 660 credit score.

As you can see – the amount of money that you are required to put down with the HomePath mortgage program can vary widely depending on the type of property you are purchasing and what your intended use is for it. There are many, many more scenarios that will impact your loan to value requirements (read: how much money you will need as a down payment) so be sure to speak with someone who is familiar with the HomePath mortgage program prior to putting a sales contract in!

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The Fannie Mae HomePath mortgage loan program has started to become more and more popular — people are actually calling and asking about the loan program by name. You can’t imagine how strange that is in the world of mortgage-guys — people usually call you and begin by saying something like:

Hello, I would like to talk to you about qualifying for a mortgage…

But recently, more calls have begun with something like:

Hello, I would like to see if I can get one of those Fannie Mae HomePath loans…

Which is strange.

But, I learned long ago — don’t fight the trend. And the truth is, the HomePath program trend is both growing in popularity and also a great program because Fannie Mae has put some of their (unlimited?) resources behind it.

One of the common questions that we get about the HomePath program is “what kinds of properties are eligible for the program?”

Fannie Mae HomePath Mortgage Loan Program: Find it On The Web First

The first step to finding out if a property is eligible for HomePath financing is to find it at the HomePath website. All properties must be designated on the HomePath website as eligible for HomePath financing. The printed property page from the HomePath website must include the date the copy was generated.  If a property is eligible for HomePath financing, it will have a logo that looks like this on it:

Mr. Obvious would like to point out that if the property has a logo that looks like the one below anywhere on the property page, this means that the property is not eligible for HomePath financing for some reason:

Fannie Mae HomePath Mortgage Loan Program: Eligible Property Types

The types of properties that may have the eligible property logo on them include:

• 1-4 unit properties
• Fannie Mae/Freddie Mac eligible condominiums
• Planned unit developments
• Modular homes
• Manufactured homes (must be a double-wide)

Ineligible properties include, non-Fannie Mae/Freddie Mac eligible condominiums, single wide manufactured homes and cooperative properties.

The minimum loan amount for the HomePath program is $20,000 (Hi Dean!) so be sure that you are planning to finance at least $20,000.

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We get plenty of people asking us questions here and from time to time, we get so many questions about a particular subject, we turn it into a full-blown post because it is popular enough that everyone wants to know about it.

Today’s question comes from a question someone submitted asking about buying a house that “needs a little work” and what kinds of loan options there are:

I am hoping to get an FHA Loan as a first time homebuyer. It is my understanding that if a house needs work, it will not qualify. I do have a house in mind and it does need work (light fixtures, appliances, etc.) Will the 203K loan be an option for me?

FHA 203k Streamline or HomePath Renovation Loan?

The answer to this question is “it depends” – and while the FHA 203k loan may be a great option, you may also be eligible for the new Fannie Mae HomePath renovation loan.  They are very similar programs – and while it is close, I personally think that the HomePath renovation loan probably has more advantages over the FHA203k streamline program because of less money down, no appraisal required and no mortgage insurance. Here are just a few of the highlights for the FHA 203k streamline and the Fannie Mae HomePath renovation loan programs:

FHA 203k Streamline Loan Highlights:

The FHA 203k streamline loan has been around for years – but with recent numbers of bank owned properties being bought that need a little work, this loan program has become hot again. Some of the highlights of the FHA 203k streamline loan include:

• It works like a construction loan – you are able to buy a home that wouldn’t qualify for FHA financing and finance the repairs that will bring it up to FHA standards
• The total amount of the loan is the purchase price plus the amount needed for repairs
• FHA has limited the Streamline 203K program to a range between $5,000 and $35,000
• The requirements to qualify are the same as a traditional FHA loan
• The construction phase can’t begin until the loan closes. The funds to pay the contractor come from escrowed funds at the closing
• Up Front Mortgage Insurance Premium and Monthly mortgage insurance are paid to FHA just like a regular FHA loan
• Appraisal required

Fannie Mae HomePath Renovation Loan Highlights:

The newest loan program for homes that “need a little work” is the Fannie Mae HomePath Renovation loan. The HomePath renovation loan is only for homes that are currently owned by Fannie Mae and you will qualify to get the HomePath loan through Fannie Mae as well. Because Fannie Mae currently owns so many homes, this is one way that they are helping people get into homes (they are also offering investors the HomeStyle renovation loan program) when the home may be in need of a few minor repairs. Some of the HomePath renovation loan program highlights include:

• Financing to fund both your purchase and light renovation
• Low down payment and flexible mortgage terms (fixed-rate or adjustable-rate)
• Down payment (at least 3 percent) can be funded by your own savings; a gift; a grant; or a loan from a nonprofit, state or local government, or employer
• No mortgage insurance

With the inventory of homes so high at Fannie Mae, it is no wonder that they came out with this great program. I woudln’t expect it to be around forever – so don’t be surprised if the program goes away once Fannie Mae sells many of the homes it currently owns.

So which loan program is right for your situation? The easy way that I try to explain this is something like this:

• Is the home owned by Fannie Mae? If yes, get a HomePath Renovation loan.
• Is the home owned by someone other than Fannie Mae? Time to look into qualifying for a FHA 203k loan.

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