HomePath Mortgage Loans – What you need to know

HomePath Mortgage Loans – What you need to know

By , Feb 27 in Programs with 6 comments

Earlier in the month, I discussed the new Fannie Mae mortgage loan program, HomePath: no mortgage insurance, no appraisal, low down payments, and contributions up to 6% of the purchase price.  Now that the program has been running for a couple weeks, I am going to reveal what I have found to be true about this program.

Let’s begin with the issue on credit score.  The advertising that I am seeing is that this program is available for people with credit score as low as 580.  True… at 580 a borrower does qualify for the program, but only at 80% loan-to-value.  To get the 95-97% loan-to-value, the mid-score must be at a minimum of 660.  Now, before someone tries to argue this, yes 95% combined loan-to-value is available for a 580 credit score.  Problem… unless the seller is willing to do a 2nd mortgage for the 15% or you can get a grant/aid (IE S.H.I.P.) to help cover that difference, then you are just plain out of luck.  Sorry, but the lender will not budge.  It is all or nothing.

Now, on to the closing costs concession.  The program allows for up to 6% of the purchase price to be given by the seller towards closing costs and pre-pays.  This means that you have to convince FNMA to give up money to help you get into the home.  GREAT NEWS!!! So far, I have seen FNMA consistently give $5000 to help.  In one case, this was over the 6%, so we had to cut the concession back.  In most cases, the $5000 has covered all the closing costs leaving the buyer to just bring money for their down payment.

The no appraisal feature has been getting mixed reviews.  Some critics to the program are saying that this is bad because the homeowner does not know what the home is really worth.  In fact, they are claiming that the home is already overpriced and that is why they are willing to give the concession towards closing costs.  In my honest opinion, good for FNMA if they can sell the home at a slightly higher value.  My reasoning is that this is their way to stall declining housing prices.  If they can sell at least three of these homes in a neighborhood, then they have set the bar for new comparisons.  Those that were below this bar are now under valued and will either sell faster or raise their prices in hopes of getting the new higher price.

HomePath is available to not just home buyers, but also investors and those looking to purchase a second home.  Again, good for FNMA.  They are doing what they can to stimulate the housing market by offering a program to all potential buyers with a program that requires little down, low monthly payments, and the elimination of potential deal killers (closing costs and appraisals).  What FNMA is doing right is that the borrower HAS to QUALIFY!!!  They are very strict on the guidelines when it comes to the individual borrower.  As I pointed out earlier, the credit score is a big one.

What makes a qualified borrower?  The basics: good credit, good income, low to moderate debt.  The mysterious black box of FNMA’s Desktop Underwriter holds the answers to what QUALIFIED really is.  With all the tightening of guidelines and President Obama’s Homeowner’s Affordability and Stability Plan, borrowers that qualify are those that historically can pay their mortgages.

And before I forget, double-wide mobile homes are eligible for this program (provided they are on the HomePath website).  And should you be looking at a home that is worth more than the conforming limits of $417,000, FNMA does allow for financing through their High Balance product line.

Comments

  • SHIP sets sail leaving behind $30 million | Knightlines Mortgage Services, LLC says :

    [...] do not worry.  100% USDA Guarantee Mortgage Loans are still in place and are still funding.  And 97% HomePath is still going strong.  Compare these two loans [...]

  • Part 2 - Mortgages in Eustis, Florida | Knightlines Mortgage Services, LLC says :

    [...] USDA 100% Guaranteed – 100% Financing, Seller can credit up to 6% of purchase price towards closing costs, not credit score driven, schooling can be used in lieu of work history, no Mortgage Insurance, must meet income limit guidelines [...]

  • kate says :

    My husband and I are planning to retire in 2 years. WE live and work outside of Pittsburgh right now and very much want to move back to Florida. If I read this right we can purchase a home now while the prices are so attractive, with a homepath loan w/3% down,as an investment? WE have excellent credit (high 700′s,both of us) is this

  • Jason says :

    Actually, an investment property for HomePath financing is only eligible for up to 90% loan-to-value (or 10%). An investor still gets the benefits on no appraisal or MI (mortgage insurance) when purchasing a HomePath home. Now, you can declare the new home in Florida as a second home if you will be using it as vacation home until your officially move to Florida. This means that you will be spending at least 2 weeks out of the year at this residence. By doing this, you may still qualify for the 3% down financing.

  • Derek Basch says :

    Great info. Thanks!

  • Jenn says :

    HomePath loans are also great for Florida condo shoppers. You can not get a conventional loan on a condo in S. FL for less than 20% down even w/excellent credit. If you try for a FHA loan, then the condo association where you wish to purchase at must be an approved FHA association. These associations, I found out, were few and far between. Fannie Mae owned condos with a Homepath (3% to 10% down) mortgage do not require the condo association to be FHA approved. This is GREAT for non-grass cutters like me!


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