I know you asked, generally, about the cost of borrowing. I would like to point out another factor to consider. You state this is a HomePath eligible home and HomePath is a govt insured loan that is quite different from FHA or other loans.
First of all they offer a 3% down option. Unfortunately, this option is quite pricey (last time I checked you pay 2.75 pts for this loan). On the other hand, if you put 5% down, they only charge 1 pt for the loan. My clients all choose the 5% down, as it only costs them 0.25% more out of pocket, but that buys them additional 2% of equity at closing.
Second, HomePath loans have NO MI. This will not only save you up front money, but also will save you the 1.15% additional MI, charged monthly, on an FHA loan. So if you are borrowing using FHA at 4.5% interest, and paying MI, your monthly payments are the same as if you borrowed at 5.65%. This is the premium you pay for not putting 20% down. However, with HomePath, that premium is waived.
Third, HomePath does not require an appraisal. You save the $400-450 up front appraisal cost.
Fourth, HomePath will allow you to buy a home that requires some repairs, and often will spell out those repairs and their costs in a disclosure to the buyer.
Fifth, HomePath is offerng 3.5% towards closing costs through October 31, 2011. With this incentive and 5% down payment option, you will most likely have enough money from HomePath to buy down your interest rate. My last client who used HomePath was able to buy down his interest rate by 0.5% using OPM (Other Peoples/HomePath Money).
HomePath loans do generally take 45 days minimum to fund, however, the seller is Fannie Mae and knows this, so you don't get any grief for asking for the longer escrow. In fact, we asked for a 45 day escrow and they countered back with 60 days. My buyers who have purchased HomePath homes have been thrilled with the monthly cost savings they get, over FHA. If you need a good HomePath lender, please feel free to contact me directly for a referral. Dare to Dream.
Shel-lee Davis, QSCÂ®
Certified Distressed Property Expert â€“ CDPEÂ®
Short Sale & Foreclosure Resource â€“ SFRÂ®
Certified HAFA Specialist â€“ CHSÂ®
Your Real Estate Consultant for Life
RE/MAX Palos Verdes Realty