Government mortgage financier Fannie Mae offers special home loan financing via its “HomePath” program, so let’s take a closer look at the guidelines.
In short, a HomePath mortgage allows prospective homebuyers to get their hands on a Fannie Mae-owned property (prior foreclosure) for as little down as three percent down payment.
And that down payment can be in the form of a gift, a grant, or a loan from a nonprofit organization, state or local government, or an employer.
Another big plus associated with HomePath financing is that there is no lender-required appraisal or mortgage insurance.
As far as the appraisal goes, lenders who finance Homepath properties will rely on the purchase price for the appraised value.
However, it is recommended that you order your own appraisal just to get an independent opinion of the value of the property you are purchasing. It won’t be used by the lender, but it’s good to know what you’re buying.
HomePath® Buyer Incentive
Fannie Mae is also currently offering buyers up to 3.5 percent in closing cost assistance through June 30, 2011.
But only those who plan to use the property as their primary residence are eligible – second homes and investment properties are excluded.
Finally, note that many condominium projects don’t meet Fannie’s guidelines, but if the condo you’re interested in is owned by Fannie Mae, it may be available for financing via HomePath. This is another plus of the program.
Additionally, some of these lenders work with mortgage brokers, so you can go that route as well if you want to shop around for a low rate.
Homepath® First Look
Another snazzy feature to Homepath is the “First Look” marketing period, which gives individuals who plan to occupy the homes first dibs at making an offer.
This can be very beneficial, seeing that investors are typically the first to come along and scoop up foreclosed properties before everyday Joes even know what happened.
The typical First Look period is 15 days (30 days in Nevada), which gives owner-occupants a nice little head start.
When scanning the listings, you’ll see a little “countdown clock” on the page that details how many days remain to make an offer. Oh, and all offers for Homepath properties are made online, which makes the homebuying process quick and easy.
In summary, HomePath might be a good alternative to purchasing a foreclosure in the open market, with a little more peace of mind knowing a big name like Fannie Mae is involved.
And with flexible down payment requirements and no mortgage insurance or lender-required appraisal, you could save some serious cash and increase your chances of loan approval.
So HomePath properties and corresponding financing should certainly be considered alongside other options.
But similar to other foreclosures, these homes are sold as-is, meaning repairs may be needed, which you could be responsible for. So tread cautiously.
I did a few searches on the Homepath website and found that many of the properties were located in hard-hit areas, and not necessarily highly-sought after regions of the country.
It makes perfect sense – these are previously foreclosed properties, so there’s a good chance they’re going to be located in areas ravaged by the mortgage crisis.
Read more: Do I qualify for a mortgage?