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HomePath Mortgage Loans
HomePath Mortgage Loans
This program offers many benefits to homebuyers, including a minimum down payment of 5 percent and no mortgage insurance. Move-in ready homes can be purchased by individuals for a primary residence or as investment properties. Homes can also be purchased with no appraisal, and greater seller contributions for closing costs are allowed under HomePath.
Fannie Mae created the HomePath program to clear its large inventory of homes in foreclosure.
Buying a Foreclosure through HomePath
One of the biggest complaints among homebuyers who attempt to buy a foreclosure is finding out their lender will not allow the mortgage, usually because the home requires repairs and will not pass inspection. In these cases, the HomePath program can help.
Fannie Mae does not lend money to homebuyers, but it does put in place guidelines lenders must follow if they want their loans purchased as Fannie Mae. The HomePath program allows lenders to finance properties owned by Fannie Mae with as little as 5 percent down if the borrower will live in the house.
The HomePath loan program also offers renovation loans if you want to buy a home that needs work. You can get financing for up to 97 percent of the home's estimated post-repairs value.
Benefits of HomePath Loans
- No home inspection necessary.
- Low 5 percent down payment required, which can be paid by an employer, through a gift or from savings.
- No home appraisal necessary, unless you want renovation funds.
- No competition with investors for the first 20 days that the property is listed. Agents cannot accept investor offers during this time.
- No mortgage insurance necessary.
- Buyers with average credit can qualify.
- Many loan options, including interest-only, adjustable-rate mortgages and fixed-rate loans.
- Some properties have improvements or repairs completed prior to listing, which may be done by a Fannie Mae-approved contractor or the Home Depot with a 1-year limited warranty.
Is a HomePath Mortgage Right for You?
Despite the many advantages, this program does have downsides. Interest rates, for example, are usually higher than comparable conventional loans. This cost can usually be offset by the fact that the loans do not require mortgage insurance, which can be costly, usually around $150 per month on a $200,000 mortgage.
If you want to buy and improve a foreclosed home, the HomePath program is one of the best options available today.
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