LOVELAND – If you’re on the market for a home, you may come across some properties owned by Fannie Mae. These are properties that were previously foreclosed. Some of them are in good condition while others may be in need of extensive repairs. A special financing program, called HomePath, is available for these properties and offers some great features.
HomePath financing availability
To take advantage of HomePath financing, you must use a local mortgage company, bank or credit union that is authorized to provide this program. There are actually two different programs. The first is HomePath Mortgage, which applies to properties that are in move-in condition. HomePath Renovation Mortgage applies to properties needing extensive repair and allows home buyers to roll in certain repair costs.
Both HomePath Mortgage and HomePath Renovation Mortgage may be used to purchase primary residences, vacation properties, or investment properties. The down payment may be as low as 5%. Sellers are allowed to help pay closing costs. Closing cost and down payment funds can even be gifted (or in some cases loaned) to the buyer. Mortgage insurance is not required. Both fixed and variable rate options are available. Overall, these loans have some great options and terms for home buyers to consider.
Appraisals are not required for the regular HomePath Mortgages. HomePath Renovation Mortgages, however, do require an appraisal to estimate the post-renovation value. This helps determine how much repair costs buyers may roll in. The limit must be no higher than $35,000 or 35% of the estimated post-renovation value (according to the appraisal).
Although most home buyers would not obtain a pre-approval for HomePath financing unless they intend to purchase a Fannie-Mae owned property, it may be helpful to know in advance whether your lender can offer this program. This will simplify the pre-approval process should you select a qualified property.
When considering any loan programs, it is important to understand all of the pros and cons. This will help you make an educated decision on which option works best for you. Keep in mind that some fees/requirements are lender specific (rather than program-specific).