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.
Broker (Ferdig Real Estate Solutions)
DRE # 01326917
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.
1) This only available on Fannie Mae owned homes.
2) There is no appraisal required. This could be either good or bad â€“ 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 donâ€™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 itâ€™s part of the permeate rate.
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 borrowerâ€™s employer, public agency, or nonprofit organization, provided no repayment is required or
-Secured loans from a relative, domestic partner or fiancÃ© 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
ï‚· The loan can require a balloon payment provided it is not within the first five years of the loan.
ï‚· The borrower must provide a document that is signed by the note holder that identifies the note holderâ€™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 email@example.com or just call me tomorrow at 916-813-4003.
on more information regarding financing and Homepath properties.
Best of luck
Please email me and we can start a dialogue regarding the particulars of your file.
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.
The qualifying process is more diffucult than the FHA process (credit grade and ratios)
Lyon Real Estate
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?
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.