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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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 are currently working with a couple of people who are buying a home that is owned by Fannie Mae and are getting approved for the new HomePath mortgage program. As mortgage guidelines have gotten tighter over the last couple of years, it is nice to see a program come out that actually has features like no appraisal and no mortgage insurance.

If you are interested in buying a home that is owned by Fannie Mae as your primary residence that is not in need of repairs, the “regular” Fannie Mae HomePath mortgage program is right for you.

You will often see homes that are eligible for this with the logo seen above somewhere on the sales sheets and information about the HomePath program will usually be in the remarks section of the MLS.

HomePath mortgage financing highlights include:

• Low down payment and flexible mortgage terms (fixed-rate, adjustable-rate, or interest-only)
• You may qualify even if your credit is less than perfect
• Available to both owner occupiers and investors
• Down payment (at least 3 percent) can be funded by your own savings; a gift; a grant; or a loan from a nonprofit organization, state or local government, or employer
• No mortgage insurance
• No appraisal required — the sales price is the value
• No declining markets policy
• No loans under $20,000
• No more than 10 financed properties
• No prepayment penalties

If you are interested in buying a home that is owned by Fannie Mae as your primary residence that is in need of repairs, the HomePath renovation mortgage program is the one that you will want to look into.

You will often see homes that are eligible for this program with the above logo on the sales sheets and will usually find more information in the remarks section of the MLS.

HomePath renovation mortgage highlights:

• 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

If you are considering buying a home that is currently owned by Fannie Mae, be sure to look into the HomePath mortgage financing program.  I don’t remember the last time that I saw a loan program that said “no appraisal, no mortgage insurance and a 3% down payment!” But then again, I don’t remember a time when Fannie Mae owned so many homes.  No wonder so many great deals are being had. Don’t miss out!

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