HomePath Loans in Arizona
With the number of REO properties increasing, HomePath financing is becoming more common compared to a year ago. HomePath financing. HomePath financing is available for Fannie Mae REO’s (Real Estate Owned/ Bank Owned properties) by searching if the property is located on HomePath.com property search tool.
The more REOs hit the market, the more questions we are being asked about the program. I hope that this will provide you with some clarity or information that you can use to take advantage of this great program. However, there are distinctions between the two types: HomePath Mortgage and a HomePath Renovation Mortgage. The difference being, the HomePath Renovation Mortgage will allow minor fixes to the property.
Here is a quick example of the HomePath Mortgage:
- Minimum 3% down for primary residence. (5% seems to be the prevalent outcome).
- 10% down investment property
- Borrower can own up to 10 financed properties (but need 25% down if they own more than 4)
- Check with your local lender to determine if they have overlaying guidelines.
- NO APPRAISAL NEEDED
- NO MORTGAGE INSURANCE
- High balance (jumbo) and interest only products available
- Seller contributions
- up to 6-9% on primary residence (the larger the down payment, the larger the allowable contribution)
- maximum of 2% on investment property
- The HomePath Loan tends to be higher in rate and at times, higher in cost when compated to a standard 30 year fixed conforming loan.
- If you want an equivalent rate to the going 30 year fixed, the loan will price with an additional (approx) 1% to 3.50% discount points. However, these costs are often covered by the seller and there is no mortgage insurance. In lieu of the discount points, one can just opt for the higher rate in lieu of the discount points.
- Same basic underwriting requirements of a conforming loan, but without the property issues (appliances missing, small wall patchwork, etc..) does not present problems with the financing.
The HomePath Renovation Mortgage is currently only offered by 3 lenders nationwide. This will allow for light renovations to the property that can be included into the loan. Information about this specific product is scarce. In general, renovation and construction type of products work like this:
- An appraisal is required ”subject to” the completion of the repairs. The value is typically determined contingent upon completion of the repairs/ or market value, whichever is lower. The down payment is determined on this appraised value (Note: most of the renovation costs are financed into the loan).
- The loan closes and the repairs are completed by a licensed contractor within a specified amount of time
- There is more involved with these types of loans, such as: bids, inspections, draw schedules, etc.
- The interest rate is typically higher than your general conforming 30 year fixed and often will incur additional costs/ discounts.
The two programs are excellent. If you have any questions as to the 2 programs, please feel free to contact me via phone (480.344.3671) or email.
