Fannie Mae HomePath Financing for Fannie Mae REOs
Posted under: Financing in Atlanta
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September 2, 2009 12:12 PM |
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4 comments
The Fannie Mae HomePath loan program is a very specific loan program developed by Fannie Mae to make financing easier for purchasers of Fannie Mae Real Estate Owned Foreclosures. It is available only on Fannie Mae REOs and allows borrowers to put only 3% down with no PMI, and no appraisal is necessary on Primary Residences or 2nd Homes (2nd home buyers are required to put down a minimum of 5%). The entire down payment on a primary residence can be a gift from a relative. UPDATE 11/6/2009: We require 10% down payment on 2nd homes.
This financing is also available for purchasing a Fannie Mae REO as an Investment property but does have some limitations. There is only a 10% down payment required when the total number of properties financed by one buyer is 4 or less, and includes the borrower's primary residence. Once a borrower exceeds 4 financed properties the required down payment on the Fannie Mae HomePath loan program goes to 20% for investment properties.
We can allow Fannie HomePath financing with credit scores down to 580 (minimum 20% down payment which can be a gift from a relative). The minimum score required to waive PMI is 660 and in some cases 680.
There are two types of Fannie Mae HomePath loans. One is atraditional type of conventional loan and the other is a renovation style loan program. The renovation loan allows for repairs to be escrowed into an account held by the attorneys for repairs to be completed by a licensed contractor. The monies held in the escrow account are distributed based on completetion dates for the various renovation projects on the property.
The closing documents must be in the attorneys office no later than 48-72 hours prior to closing (depending on the attorneys closing the loan) for Fannie Mae HomePath financing. This is because the settlement statement and deeds have to be signed off on by an authorized agent of Fannie Mae at one of their corporate offices. It is crucial that the delivery meets these time frames. This is partialy why we are a recommended provider of this relatively new program.
We have been able to assist the real estate agents in getting fannie mae to pay the fees to eliminate PMI for the purchaser. Rates and costs for Fannie Mae HomePath financing are based on credit scores and ltv.For example: at 95% ltv with a credit score of 720+ there is a 2.5% fee to waive PMI. With lower scores the fee to waive pmi will be higher but can be absorbed. At 97% the fee is 3.0% of the loan amount to waive PMI. Fannie Mae typically pays for this.
We have closed Fannie Mae HomePath loans at 3% down (which can be a gift from a relative) with no PMI at 5.0% 30 year fixed. There were no appraisals or appraisal fees.
Get a quick quote on the Fannie Mae HomePath loan with no social or personal information - or apply online for the best rate and terms you will find anywhere in GA. You will save in finance charges and closing costs with a lower wholesale rate vs. our competition.
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Comments
The Fannie Mae Home Path allows for a lower down payment and no PMI. Typically this is the better option for borrowers with higher credit scores.
The FHA loan allows more flexible underwriting for borrowers with lower credit scores and lower liquid assets.
Some of the differences are listed below.
Fannie Mae HomePath FHA
Down Payment primary 3% only allowed for primary - 3.5%
Gifts allowed yes - all can be gift from relative yes - all can be gift
Seller Paid Costs 6% 6%
Monthly MI **no pmi option - charge depends on score/ltv .5% - .55% depends on ltv and score
Appraisal NO appraisal required on Primary YES
Minimum Score 660 580
Escrow for repairs yes - renovation loan yes - 203K - primary
Warranty yes - included seller provided or can purchase
I've financed homes for borrowers under both loan types and loan selection typically comes down to credit score and the amount the seller is paying towards closing costs. Thanks and hope this helps.
Jeff Hutchison
Fannie Mae HomePath (HP) vs. FHA
Down Payment:
HP - primary 3%
FHA - only allowed for primary - 3.5%
Gifts allowed:
HP - yes - all can be gift from relative
FHA - yes - all can be gift
Seller Paid Cost:
HP - 6%
FHA - 6%
Monthly PMI:
HP - **no pmi option - charge depends on score/ltv
FHA - .5% - .55% depends on ltv and score
Appraisal:
HP - NO appraisal required on Primary
FHA - YES
Minimum Score:
HP - 660
FHA - 580
Escrow for repairs:
HP - yes - renovation loan
FHA - yes - 203K - primary residence only
Warranty:
HP - yes - included
FHA - seller provided or borrower can purchase
I've financed homes for borrowers under both loan types and loan selection typically comes down to credit score and the amount the seller is paying towards closing costs. Thanks and hope this helps.
Thanks, Jeff Hutchison