Understanding Fannie Mae HomePath

What is a HomePath eligible property?

HomePath is a property that is owned by Fannie Mae, by foreclosure, deed in lieu or voluntary surrender.� It is similar to an REO or bank owned property.

This program is essentially designed to allow financing for properties owned by Fannie Mae, so the guidelines for lending may be relaxed quite a bit.�

Who is it for?

Any qualifying borrower, whether they are investors or intend to occupy the property as the homeowner, can use the HomePath program.

What properties qualify?

Any property owned by Fannie Mae will qualify for the HomePath program.� You cannot use this program on any other foreclosed property

What if the home needs repairs?

The great thing about the HomePath program is they will finance in the repairs needed (within certain restrictions) to make the home livable, and lendable at a future date.

How much down payment is required?

Depends on what you are trying to do, but at least 5% down payment is required for owner occupied.� If you are an investor, the down payment is 15%.

How long does it take to close?

Because of the steps required, plan on 30-60 days to close your loan.� Anywhere in the 45 day range is reasonable.

Can I do repairs with a loan?

HomePath Renovations is specifically designed to allow for repairs with loan proceeds.� It is the reason this program stands out from the rest of the field.

The maximum dollar allowed is $30,000 or 20% of the completed projects appraised value.� You can only get the lesser of the two numbers.

If you home is worth $200,000 after the repairs, you will not see $40,000 (20% of $200k), plan on only $30,000 since that is the ceiling.

On the other side of the coin if your home is worth $100,000 offer the repairs, you will be capped at $20,000 since it is less than $30,000.

If you are doing the renovation plan, closing can take longer, since the contractors have to do the bids.� Additionally, the appraiser will need to have a materials list to know what improvements will be made, since the quality of what you are putting into the repairs will drive the price.� It makes since, since a granite counter top will be a higher dollar improvement over a vinyl countertop.

What do I need to know when making an offer?

Make sure you negotiate closing costs in the offer.� Unfortunately, Fannie Mae is notorious about advertising they will pay 3.5% towards the fees, but will not honor that if it is not in the sales agreement.
Don�t try to make an offer contingent on anything, since that is not allowed.� They will just deny it.� Better to have everything lined up, and then make an offer.

Any repairs Fannie Mae is going to make, will be likely be made prior to you even seeing the property.� So asking them to do the repairs is highly unlikely.� Plan on hiring a contractor, and you deal with it.

Is there mortgage insurance?

Another great feature of HomePath is the lack of mortgage insurance, with so little down.� No mortgage insurance.� This can save you 50-150 every month, depending on your loan amount.
Is getting a gift for the down payment is acceptable?

Will Fannie Mae do repairs?

Some repairs at best, if it is critical for marketing the property.� The homes are sold as is meaning any problems are your concern, not Fannie Mae�s.� If the home needs repairs, consider using the program HomePath Renovation.

What does "as-is" mean?

As-is means any problems with the property are your problem, not the sellers.� No warrantees or guarantees of any kind.

Is there an alternative program available?

There is!� FHA 203k is a similar program.� There is smaller down payment required, along with other benefits.� The downfall is there is mortgage insurance.

If you followed the text above, you are probably informed enough to make an offer, so let�s get started.� But there is one more step.� You need to be pre-qualified to make an offer on a HomePath property.� �Get your questions answered and a HomePath pre-qualification letter so you can make an offer today.