Financing in Washington>Question Details

Matthew Lath…, Home Buyer in Washington, DC

Fannie Mae HomePath Closing Cost Assistance

Asked by Matthew Latham, Washington, DC Fri Feb 12, 2010

Several posts have stated that when using HomePath financing, closing cost assistance may increase when the buyer down payment increases. ie 3% assistance w/ 3% down, 6% assistance w/ 10% down, and 9% assistance w/ 25% down.

The HomePath website states that the FNMA is offering a 3.5% incentive toward closing costs or appliances.

Which is correct?

Is there any benefit in putting more than 3% down since there is no PMI regardless of the down payment amount?

Is it advisable to use HomePath financing over a 203k, even if some rehab work needs to be done? Could I pay out-of-pocket for those repairs?

How can I make an offer more appealing to FNMA? Should I remove the financing contingency? Should I offer an EMD of $10,000? My lender has all my documentation and is ready to move forward. I have excellent credit (790), a well-paying stable job, and up to $50,000 available for downpayment/repairs. The house is listed at $255,000.

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Answers

6
BEST ANSWER
See my responses to your question below.

Which is correct?
Both are correct. What the HomePath website states is that FNMA is offering 3.5%. In the past that was purely a negotiation (i.e. they sometimes would give $0 toward closing costs). They are able to give more if you can negotiate that. With 5% down they can give up to 6%. That doesn't mean they will, that would depend on your overall offer.

Is there any benefit in putting more than 3% down since there is no PMI regardless of the down payment amount?
Yes, the rate is going to be around 0.25% to 0.5% lower with 5% down than with 35 down. If you have $50k available, I'd opt for the 5% down.

Is it advisable to use HomePath financing over a 203k, even if some rehab work needs to be done? Could I pay out-of-pocket for those repairs?
Depends. With HomePath financing, you can use your cash to do the repairs yourself of use handymen once you move in. With 203k you'd have to use contractors and it could cost more. But with a 203k you can finance most of those costs. You can't with a regular HomePath.

How can I make an offer more appealing to FNMA? Should I remove the financing contingency? Should I offer an EMD of $10,000? My lender has all my documentation and is ready to move forward. I have excellent credit (790), a well-paying stable job, and up to $50,000 available for downpayment/repairs. The house is listed at $255,000.
Fannie Mae just looks at the bottom line. I'd rely on your realtor for making the best offer. I think a HomePath offer would be more appealing than a 203k offer since there is no appraisal required. But if your offer is the only one on the table, then you could be ok either way.
1 vote Thank Flag Link Fri Feb 12, 2010
Well, you never know how many offers they have and why they choose that specific one, even your offer was higher than asking price, very clean, asked very little back.
I wrote few offers for homepath properties, I know NOT the highest one wins.
0 votes Thank Flag Link Wed Jul 25, 2012
Question #1
Several posts have stated that when using HomePath financing, closing cost assistance may increase when the buyer down payment increases. ie 3% assistance w/ 3% down, 6% assistance w/ 10% down, and 9% assistance w/ 25% down.

Answer
This is incorrect based on my experience Fannie Mae will take the best offer available in terms of the net proceeds coming back on the sell of the home. If there is multiple offers the offer asking for a seller credit will be turned down if there is another offer asking for none. It is customary for Fannie Mae to counter offer in a multiple offer situation with a highest and best offer from all pending offers. Fannie will not tell you what the current offers are but will give you an opportunity to resubmit a higher offer.

Question #2
The HomePath website states that the FNMA is offering a 3.5% incentive toward closing costs or appliances. Which is correct?

Answer
It was either or but the program is no longer available, but that doesn’t mean you can’t still ask for seller credits. Fannie will typically take an offer asking for up to 6% seller credit if there are no other offers. Fannie Mae is in the loan purchasing business not real estate holding they want to sell off these homes.

Question #3
Is there any benefit in putting more than 3% down since there is no PMI regardless of the down payment amount?

Answer
Yes, I recommend putting at least. 5% down because of the increase in loan cost between putting 3% down and 5%. Email me if you need a break down of the differences in rate and cost.

Qustion #4
Is it advisable to use HomePath financing over a 203k, even if some rehab work needs to be done? Could I pay out-of-pocket for those repairs?

Answer
HomePath Mortgage has several benefits and when comparing an FHA loan to a HomePath loan you need to look beyond the interest rate. Look at the APR and closing cost when comparing these two loan products. HomePath doesn’t require the hefty upfront mortgage insurance premium of 2.25% or the additional cost of mortgage insurance being added to your payment monthly. Not to mention no appraisal.

Question #5
How can I make an offer more appealing to FNMA? Should I remove the financing contingency? Should I offer an EMD of $10,000? My lender has all my documentation and is ready to move forward. I have excellent credit (790), a well-paying stable job, and up to $50,000 available for downpayment/repairs. The house is listed at $255,000.

Answer
Fannie Mae varies the amount of EMD required based on the purchase price. Again since FNMA is only looking at its bottom line it doesn’t matter the size of the deposit.
Web Reference: http://www.ccflender.com
0 votes Thank Flag Link Tue Jul 20, 2010
How can i get help on closing cost if i make over 55 thousand a year?
0 votes Thank Flag Link Sat Mar 6, 2010
The most appealing offers to any bank have no contingincies, ask them to fix nothing, ask for no credit at closing and close within 21-30 days. You should complete any inspection before bidding so you know what to offer. As far as the amount of money to put down, you really need to one be financially seciure to do so and to write each one out and write next to it what the benefit would be. If teh benefit is worth it to you, then you should do what you feel comfortable. good luck with your purchase.
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Fri Feb 12, 2010
I would recommend have your buyers agent, mortgage broker, and CPA review all your pro's and con's determine what is you best interest.

CPA can provide you annual tax benefits how to structure loan .

Lynn911
Web Reference: http://www.lynn911.com
0 votes Thank Flag Link Fri Feb 12, 2010
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