Financing in Sacramento>Question Details

luvbug, Home Buyer in Sacramento, CA

Is a homepath loan a harder one to get approved by a lender?

Asked by luvbug, Sacramento, CA Tue Apr 3, 2012

We are currently in contract for a homepath home and are now being told that we should go FHA and find another home because homepath has stricter guidelines. Our credit score qaulifies for homepath. So what's the problem? I can't find anything from 2012 that gives me any information...most things I find are from years ago and supposedly it's supposed to be easy to get approval. Please Help!

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Rachael Rheinlander’s answer
Does anyone on here know if you are purchasing a home on the home path sight and it only has the rennovation logo but you do not want to take the extra money out on a loan but would rather use your cash reserves can this be switched to just a regular home path loan instead of rennovation?

Thanks
2 votes Thank Flag Link Sat Mar 2, 2013
HomePath financing is a little more expensive in terms of fees and interest rate. Typically you won't qualify for as much under HomePath as you would under FHA. HomePath could be an advantage when the property you're interested in may not qualify for FHA financing due to condition.
3 votes Thank Flag Link Tue Apr 3, 2012
Mike-
Is there a minimum tradeline requirement with HomePath? I'm being told the buyer's need 24 months account history on their cc's or installment debt. Do you know if this is a Fannie Guide or is is an investor overlay?
Flag Thu Aug 15, 2013
I sell FHA & HomePath. Both are great loans. HomePath just makes the REO flow easier and in the absence of mortgage insurance, despire the higher rate associated with HomePath (usually 1% higher than FHA) the payment is usually dead on with FHA (from my experience). Not to mention you can write off the interest associated with the higher HomePath rate vs. the mortgage insurance on other loans. Of course consult your tax attorney.
Flag Tue Apr 17, 2012
As other said, HomePath has some stricter guidelines and is a little bit more expensive, but no mortgage insurance, which may very well make up for the slightly higher interest rates, especially since the MI rates are scheduled to go up again in the very near future. One thing that you may also keep in mind is that FHA loans are assumable (HomePath loans are not) and that may become a valuable thing in the years to come when interest rates will be higher again. While you may not be thinking about resale now, you also don't want to totally ignore that. Sometimes we fight for something just because we don't like it when we are being told that we can't have something. Make sure you are not chasing after the HomePath loan for the wrong reasons.

Although you did not mention a CalHFA loan, many buyers will consider it as a good option because various attractive first time buyer options. The one drawback that I see with a CalHFA loan is the owner occupancy requirement, which can again become a problem when you have to move, but maybe don't want to sell. At this time, CalHFA sees vacating the property and/or renting it out as actions that they consider a default on the loan agreement and CalHFA has been known to foreclose on homeowners who moved even though they were current with their mortgage. Sorry for digressing a little bit from your question. Since you seem to be looking for an alternative loan program, I thought I mention CalHFA just in case you were considering it. I am not saying CalHFA is bad. Just have to know what the downsides are.

Good luck with your purchase.

Ute Ferdig
Broker (Ferdig Real Estate Solutions)
DRE # 01326917
2 votes Thank Flag Link Tue Apr 3, 2012
Ute Ferdig -…, Real Estate Pro in Newcastle, CA
MVP'08
Contact
Maybe I'm missing something here than the other respondents, but I believe that only homes sold by Fannie Mae qualify for a loan program called Homepath. Freddie Mac homes have a similar loan program called Freddie Mac.

Homepath and Homesteps are loan programs with benefits such as no appraisal required, and a 2 year warranty often provided for free but has different qualifying criteria and the loan program only works for the Fannie Mae, or Freddie Mac home. If you choose another home, you can't move the loan to that other home. Therefore, it's always important to keep that straight and consider all of your loan options when you've selected a home.

Speak with a local lender who works with all the programs so that you understand your options. There are pros and cons to each selection.

Your question has a couple mis-statements. The home you are in contract for is a Fannie Mae home. You could most likely use any loan program but Homepath is offered on that home. Fannie Mae often overprices a home when first released to the market, so I would strongly suggest getting an appraisal even if the lender doesn't require one. And in the end, work with a lender you trust to guide you in the right direction. Call if you need one.
2 votes Thank Flag Link Tue Apr 3, 2012
Homepath is basically a Fannie Mae conventional loan with a few notable exceptions:

1) This only available on Fannie Mae owned homes.
2) There is no appraisal required. This could be either good or bad – depending on your perspective. On the one hand there are no appraisal or property standards to worry about coming from the lender. However, there is also no independent valuation to make sure that you are not over-paying for the house. Fannie Mae has been known to offer these homes at what many Realtors consider over market value.
3) Unless you are putting 20% or more down the interest rate will be higher. This is because you pay the costs of the mortgage insurance in the rate, and you don’t have the option of having the lower rate and paying mortgage insurance. This is not necessarily a bad thing, but it does limit your options. This will also have the effect of not having the option to go with a higher rate and have the lender pay some or all closing costs because you are already at a higher rate. Of course if the property increases in valve or you accelerate the payments and pay off the principle faster you will not be able to remove the mortgage insurance because it’s part of the permeate rate.
Web Reference: http://SacRELender.com
1 vote Thank Flag Link Tue Aug 13, 2013
You should talk to a mortgage broker or someone that knows a lot about loans. I know one of the owners of The Lenders Network they can help you with a lot of your questions, let them know I referred you.

Good luck!
1 vote Thank Flag Link Sat Aug 10, 2013
How long you need to wait if you had a foreclosure
1 vote Thank Flag Link Wed May 8, 2013
HomePath is very simple and straight forward. It is for Fannie Mae owned REO only. If you are financing 80% LTV = 660 fico. All other requirements are per DU findings.

There is no appraisal required nor mortgage insurance regardless of LTV.

Here are some other elements of HomePath:
The following sources are eligible when LTV/CLTV exceeds 95%:
- Gift Funds from acceptable donors.
- Grants from a borrower’s employer, public agency, or nonprofit organization, provided no repayment is required or
expected.
-Secured loans from a relative, domestic partner or fiancé that comply with the following:
ï‚· The loan must be a fixed rate loan at an interest rate not to exceed the note rate of the mortgage by more than
2%.
ï‚· The loan can require a balloon payment provided it is not within the first five years of the loan.
 The borrower must provide a document that is signed by the note holder that identifies the note holder’s name,
address, relationship to the borrower, and the terms of the loan; and
ï‚· The note holder cannot be an interested party to the transaction, nor can the note holder obtain the funds to
lend to the borrower from an interested party to the transaction.
Secured loan from an employer, public agency, or nonprofit organization, not including credit unions;
ï‚· Must be documented with an award letter or legal agreement from the note holder and must disclose the terms
and conditions of the loan.
In all circumstances described above, evidence of the transfer of the funds to the borrower is required.

All in all, I love the HomePath. As a Fannie Mae preferred lender, we can fund in 8-10 days.
If you have any additional questions, please feel free to email me at msmith@myprovident.com or just call me tomorrow at 916-813-4003.
1 vote Thank Flag Link Tue Apr 17, 2012
If the lender you are working with can do both HomePath and FHA loans then they should be able to tell you what the problem is. If you like you can check out:

http://www.203kmortgagelender.com/blog/homepath-renovation-m…

on more information regarding financing and Homepath properties.

Best of luck
1 vote Thank Flag Link Tue Apr 3, 2012
Homepath generally has stricter lending criteria than FHA in terms of credit score, credit quality and debt to income ratio. But if you have decent credit and a decent debt to income ratio, you should be fine homepath.
1 vote Thank Flag Link Tue Apr 3, 2012
I would definitely consider a Homepath home. They can be move in ready and don't require an appraisal. With inventory so low I would not limit your options. If you have an experienced lender they can discuss the costs associated with this type of loan. Then you can decide if this is the right choice for you. In my opinion, you should consult with two or three lenders before making a decision. Best of luck!
1 vote Thank Flag Link Tue Apr 3, 2012
Amanda:

Please email me and we can start a dialogue regarding the particulars of your file.

cgravelle@diversifiedmg.com


You can still purchase the HomePath home with FHA financing, if you need to do so.

But it would be good to know the particulars of your package to understand why that is being told to you.
1 vote Thank Flag Link Tue Apr 3, 2012
The only problem I have seen personally in buying a HomePath home with FHA, is that the property is "as-is" and many appraisers are calling out pest reports (on 5-10 year old homes...really?). HomePath with no MI pencils out better than FHA, but as Claudia so astutely states "you can stil purchase the HomePath home with FHA." Having said that though, many of my REO listing agents don't like that course because it just causes more headaches and delays. Choose your lender wisely! :)
Flag Tue Apr 17, 2012
Home Path approval requirements are consistent with any other conventional financing requirements. Because you will not have mortgage insurance, the payments will be slightly less allowing you to qualify for a greater amount.

The qualifying process is more diffucult than the FHA process (credit grade and ratios)
1 vote Thank Flag Link Tue Apr 3, 2012
As far as I know, and I'm not a mortgage expert, homepath loans are often times easier to get because they will not require an appraisal and their criteria is not as strict. You do, however, pay higher cost and overall higher interest rates for it. It really depends on the scenario and what you are looking to do. I would speak to a seasoned loan officer to discuss the different options available. Let me know if you would like a reference.
Web Reference: http://www.teamhybridre.net
1 vote Thank Flag Link Tue Apr 3, 2012
Remember you can offer what you want on a house. Have your Realtor run the comps and give you a good idea where your price should be. You don't have to get an appraisal but you still can if you want to. Rates are usually a bit higher on Homepath but in a low inventory market like we have here in Santa Clarita I look for Homepath homes to give my FHA buyers more choices.
Good Luck.
Web Reference: http://Www.Laura4Homes.com
1 vote Thank Flag Link Tue Apr 3, 2012
Amanda, I suggest you get your lender to commit asap so that you can close on time. You may need drop the Homepath loan and go FHA or conventional. I have seen that happen. If you change loan programs you may need an extension of time to close from your Homepath seller. Homepath closing guidelines can be rigid. For that reason, getting your loan straight now is very important to prevent missing your contract closing date.
1 vote Thank Flag Link Tue Apr 3, 2012
In my experience, HomePath homes are priced higher than other homes in the same neighborhood. There is also no appraisal contingency. So, you're taking your chances. On the other hand, appraisals are not an etched-in-stone message from God, either.

Elizabeth Weintraub
Broker-Associate #00697006
Lyon Real Estate
1 vote Thank Flag Link Tue Apr 3, 2012
You are always free to get your own appraisal as well, even with homepath, if you are unsure of what you are buying. To that, if you are nervouse, get a home inspection and pest report (paid outside of close) and see what (if anything) you might be dealing with.
Flag Tue Apr 17, 2012
No. It's no different than any other GSE loan program. In fact, it's sometimes easier considering for one, you do not need an appraisal. There are sometimes, some higher fees and less negotiation available but, they aren't any more complicated.

I did a Homepath loan on my last purchase. It was no different from a stip and condition (What the underwriter does/looks at/needs) than any conventional or government loan i've done in the past).

I assume you are trying to buy a Fannie Mae owned home right?
0 votes Thank Flag Link Tue Apr 8, 2014
Homepath is a great loan program, with low down payments and no appraisals required, but do have more stringent credit and debt to income requirements than FHA loans. Unfortunately, Fannie Mae does not distinguish between a "normal" Fannie Mae loan and Homepath loans. I am helping a client now who has debt ratios around 46%, with credit scores slightly above 660. He wanted to pursue a Homepath loan, but Fannie Mae's underwriting system would not approve him with 5% down. He did go through the automated system for an FHA loan with 3.5% down. so it's a happy ending, but, had he qualified, the Homepath loan would have been a better option for him. Want more info on all the low down payment options available? Glad to help, I write loans nationally, been helping folks since 2000. Here's a link to my profile on Mortgage News Daily (which is an awesome site for mortgage info!): http://www.mortgagenewsdaily.com/members/trood/default.aspx
0 votes Thank Flag Link Thu Apr 3, 2014
Wondering why your lender said you had to go FHA rather than Homepath. You should be able to refinance out of your FHA loan that has high MIP and reduce your payments.

As an approved Homepath lender in California, we do a lot of Homepath purchase loans where the selling price may be higher than what it would appraise for.
0 votes Thank Flag Link Thu Mar 27, 2014
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