The Mortgage Porter

What's the difference between Fannie Mae Homepath and Freddie Mac Homesteps?

Fannie Mae and Freddie Mac both offer special incentives to entice buyers to properties they have foreclosed on. Fannie Mae's program is called Homepath and Freddie Mac's is Homesteps. Although the names some similar, their incentives are VERY different.

Fannie Mae's Homepath program is only available for homes identified on their website www.homepath.com.  As of the publishing of the post, the Fannie's Homepath site reports their are 175 homes listed in the greater Seattle area alone. The Homepath program is actually a conventional Fannie Mae program that offers special guidelines, including:

• expanded loan to values: as low as 3% down payment for owner occupied and 10% down for investment property.
• no appraisal required.
• no private mortgage insurance with credit scores of 660 or higher.
• condos are easier to finance than typical conventional (less requirements).
• competitive rates
• conventional Fannie Mae financing. NOTE: you can do other types of financing with a Homepath property, however you will not receive the above listed benefits.

Click here for a rate quote for a Fannie Mae Homepath mortgage on homes located anywhere in Washington.

Freddie Mac's Homesteps offering is not a special mortgage program. It's essentially a seller concession on homes owned by Freddie Mac. Homesteps properties are located at www.homesteps.com. Currently there are about 48 homes in Seattle that qualify for Freddie Mac's Homesteps.  Incentives include:

• program works with any type of financing, including FHA, conventional, VA and USDA. 
• 3% contribution towards actual buyers closing cost.
• 2 year home warranty
• discount on appliances available with the Smart Buy Program
• owner occupied only

Click here for a rate quote for programs that work with Freddie Mac Homesteps (FHA, conventional, VA and USDA) on homes in Washington.

Sometimes Fannie Mae will offer additional incentives (such as closing cost credit) with their Homepath program. They'll post this information on their site and of course, when those incentives are available, I share that information on my blog too. 

If you're considering buying a home located any where in Washington, where I'm licensed to originate mortgages, I am happy to help you!

Buying a $500,000 Seattle Home with 10% Down

I was recently contacted by a home buyer in Seattle who wanted to know what mortgage programs we have available for a sales price of $500,000 with a 10% down payment. With less than 20% down, the loan will probably have mortgage insurance unless they can find a Fannie Mae Homepath property.

Let's review some scenarios assuming the home buyers have excellent credit (scores over 740) and a 30 day closing with a loan amount of $450,000.  With a 10% down payment, the seller can pay up to 3% (Freddie Mac) or 6% (Fannie Mae) with a conforming high balance mortgage. Rates quotes are effective as of 5:00 pm on January 24, 2012.

Conventional 30 Year Fixed with Private Mortgage Insurance.

4.375% with a PIMI (principal, interest and private mortgage insurance) payment of $2543.03 and with closing cost of $3074 (apr 4.858).

4.125% has a PIMI of $2477.17 and will cost more in discount points with closing cost of $7988 (apr 4.686).

4.500% has a PIMI of $2422.58. The payment is lower due to the lower pmi rate since a portion of it is paid for "up front' as a "split premium" similar to FHA except at a much reduced cost. Net closing cost, after lender credit applied with rebate pricing is estimated at $5063, including the upfront pmi (apr 4.856).

For the above scenarios, it will take about 7 years for the private mortgage insurance to drop off of the mortgage payments, at which time, the home owner will benefit from having a reduced payment. When considering a second mortgage piggy back scenario, you may want to estimate how long you will have the second mortgage and what the cost will be over the life of the loan compared to private mortgage insurance.

Fannie Mae Homepath will require the buyers find a Fannie Mae REO property that is eligible for financing utilizing a Homepath mortgage. I just checked Homepath.com and found the most expensive home currently listed in Seattle is $449,000 (which you can actually purchase with as little as 3% down payment). Homepath Mortgages do not require an appraisal nor do they have private mortgage insurance. For the comparison purposes, the following quote is based on a $500,000 sales price with 10% down payment using Fannie Mae Homepath:

5.125% for a 30 year fixed with a principal and interest payment of $2450.19 and closing cost estimated at $2762 (apr 5.187).

FHA is an option for these buyers however I would only recommend it IF:

• buyers are considering allowing their mortgage to be assumed in the future;
• buyers are converting existing home into a rental since FHA requires less reserves than conventional financing;
• credit scores are lower

Here is how an FHA high balance loan would compare based on today's pricing:

3.750% for a 30 year fixed with a PIMI of $2513.91 with $2782.50 for closing cost assuming the upfront MIP is financed (apr 4.397).  

I am seeing sellers very open to paying for closing cost. I'm also hearing from my clients in the Seattle area that homes that are new on the market and not short sales have been moving fairly quickly.

If I can provide you with a rate quote or help you prepare for buying a home anywhere in Washington, please contact me.

The Low Down: Comparing FHA to Fannie Mae Homepath Mortgages

If you're thinking about buying a home with minimum down payment requirements in the greater Seattle area, you may be considering a property that is owned by Fannie Mae and eligible for the Fannie Mae Homepath Mortgage or using an FHA insured loan which most properties qualify for.  When home buyers contact me about a Fannie Mae Homepath mortgage, they often ask how it compares to an FHA insured loan. Both are great programs and the benefits may vary depending on credit score, down payment and the type of property.   

Rates quoted are as of 8:45 am on September 13, 2011 and are subject to change and are based on mid-credit scores of 740 or higher and a sales price of $340,000.

For your rate quote with current pricing for homes located in Washington, please click here.

Fannie Mae Homepath. Currently Fannie Mae is offering an incentive to buyers of 3.5% towards their closing cost and prepaids for transactions that close by October 31, 2011 on qualifed Homepath properties.  With this scenario, a 3.5% contribution towards closing cost is generous enough to buy down the mortgage rate with discount points.  Fannie Mae Homepath mortgages do not require appraisals.  Fannie Mae Homepath Mortgages are only avalable on homes designated by Fannie Mae.

• Rate: 4.500% for 30 year fixed rate priced with discount points of 0.817% paid by the seller's buyer incentive (apr 4.709%).
• Payment: $1,671 for principal and interest. There is no private mortgage insurance for credit scores over 660.
• Minimum down payment (3% of sales price): $10,200.

FHA. Sellers can contribute towards closing cost and prepaids with an FHA transaction as well as l1ong as it's agreed to in the purchase and sales agreement. FHA loans are available on most homes that do not exceed loan limits and HUD approved condos. Unlike the Homepath Mortgage, FHA mortgages DO require an appraisal.  FHA mortgages may be assumable to qualified buyers in the future and FHA mortgage insurance will drop off after 60 payments AND the loan reaches 78% loan to value.

• Rate: 3.750% for 30 year fixed priced with 1.107% rebate credit (apr 4.476%).
• Payment: $1,846.48 for principal interest ($1,534.68) and mortgage insurance ($311.80).
• Minimum down payment (3.5% of sales price): $11,900

Which scenario is best for you depends on your personal financial scenario and goals. I'm pleased that I able to offer both programs to you if you're considering a home that's located anywhere in Washington state.  

If you have questions about any of these programs or are interested in a mortgage, please contact me.

Fannie Mae Homepath Buyer Incentive Extended Once Again

Fannie Mae is extending their buyer incentives of 3.5% towards closing cost on qualified Fannie Mae homes through October 31, 2011.  In addition, they're also offering real estate agents a selling bonus of $1,200.   

Here are some details for qualifying for the Fannie's Homepath Mortgage special (from the Homepath website):

• Buyers and/or selling agents (the agent representing the buyer) must request the incentive upon submission of initial offer in order to be eligible.
• The initial offer must be submitted on or after June 14, 2011 and close by October 31, 2011. If an initial offer was made prior to the effective date, the offer is not eligible for the incentive.
• The sale must close on or before October 31, 2011. No exceptions will be made to this deadline.
• Only buyers purchasing a HomePath property as their primary residence may receive up to 3.5% in closing cost assistance. Second homes and investment properties are excluded from the incentive.
• Buyer must sign the Owner Occupant Certification Rider to the Real Estate Purchase Addendum.
• If a buyer's total closing costs are under 3.5%, the difference will not be available as a credit to the buyer.

Don't forget, the Fannie Mae Homepath Mortgage does not require an appraisal and there is no private mortgage insurance for credit scores over 660.   Fannie Mae will lend up to the high balance conforming loan limit, which is currently $567,500 in the greater Seattle area (this loan limit is set to be reduced October 1, 2011).  For more information about Fannie Mae's Homepath Mortgage, click here.

We are pleased to offer the Fannie Mae Homepath Mortgage for homes located anywhere in Washington.  Here's an example of rates effective as of June 16, 2011 at 9:45 am for this home located in the Crown Hill neighborhood in Seattle offered at $408,000 based on a credit score of 740 or higher and utilizing the 3.5% credit towards closing cost closing in 30 days.  With the closing cost credit, home buyers can purchase qualified Homepath properties with just their down payment.

With a 3% down payment of $12,240, the 30 year fixed rate is currently 5.00% (apr 5.232). The principal and interest payment is $2,124.53 - remember there is NO private mortgage insurance!  

With a little extra down payment of $20,400 (5% down), the rate improves to 4.750% (apr 4.978) with a principal and interest payment of $2,021.91.

A down payment of 10% currently provides a rate of 4.625% (apr 4.584) with a principal and interest payment of $1,887.92.

Adjustable rate mortgages are available with this program too.

If you would like a rate quote or are interested in getting preapproved for a Fannie Mae Homepath mortgage, please contact me! 

How to Buy an Investment Property with a 10 Percent Down Payment with no PMI: Fannie Mae Homepath Mortgage

Seattle area investors are taking advantage of current lower home prices and are buying rental properties.  One of the issues with investment property is that it often requires a larger down payment and more stringent underwriting guidelines.  However, if you buy a qualified property that is owned by Fannie Mae, the Homepath guidelines will allow as little as 10% down for an investment property with NO private mortgage insurance and NO appraisal.

Mortgage Master Service Corporation's program requirements for the Fannie Mae Homepath Mortgage Program for investment properties:

• Purchase transactions only
• Single Family Dwellings, PUDs and Condominiums allowed
• Home must be designated a Fannie Mae Homepath property (Fannie Mae Renovation Financing is not allowed).  Make sure properties have the logo shown on this post to be eligible.
• Minimum mid-credit score of 660.  Risk based pricing (LLPA) applies...the higher your credit score, the better your rate may be.
• Maximum LTV of 90% (1-Unit properties)
• Full documentation of borrower (income, employment, assets, etc.). 
• Gift funds not allowed with investment property
• Maximum financed properties allowed: 4

Here are some highlights of Fannie Mae's Homepath Mortgage Program for non-owner occupied properties:

• No mortgage insurance required
• No appraisal.  Property value is accepted as the sales price.
• Fixed rate and ARMs available
• Loan amounts up to $417,000 
• Seller/Interested Parties may contribute up to 2%
• Borrower may qualify with rental income of the proposed property with a bona fide signed lease.

Here's an example of current rates (effective April 26, 2011 as of 8:30 a.m.) utilizing a 30 year fixed conforming based on a low-mid credit score of 720-739 purchasing a qualified property using Homepath Mortgage with a sales price of $300,000 and 10% down payment:

• 5.75% priced with 0.498 rebate/credit (apr 5.871).  Principal and interest: $1575.65*
• 5.50% priced with 0.420 discount points (apr 5.704).  Principal and interest:  $1533.03*

*Property taxes and home owners insurance are additional and there is NO mortgage insurance.

At 20% down payment, if you are purchasing a qualified Homepath property, the pricing is currently better than what you would have available using a standard conforming mortgage.  It's worth checking out this program.

For more information or to find an eligible Homepath property, visit www.homepath.com.  King County alone currently has 629 properties listed on Fannie Mae's Homepath site!  

If you're interested in a Fannie Mae Homepath Mortgage on homes located anywhere in Washington state, please contact me - I'm happy to help you with your financing.  Click here if you would like a mortgage rate quote.

 

Fannie Mae Homepath Mortgage Incentives are BACK!

NOTE:  This program has been extended through October 31, 2011.

Fannie Mae is trying to sweeten the pot for buyers to considering using a Fannie Mae Homepath Mortgage for purchasing a foreclosed home that is now owned by Fannie Mae by offering 3.5% in closing costs on eligible transactions that close by June 30, 2011.

Here are some details for qualifying for the Fannie's Homepath Mortgage special (from the Homepath website):

• Buyers and/or selling agents (the agent representing the buyer) must request the incentive upon submission of initial offer in order to be eligible.
• The initial offer must be submitted on or after April 11, 2011 and close by June 30, 2011. If an initial offer was made prior to the effective date, the offer is not eligible for the incentive.
• The sale must close on or before June 30, 2011. No exceptions will be made to this deadline.
• Only buyers purchasing a HomePath property as their primary residence may receive up to 3.5% in closing cost assistance. Second homes and investment properties are excluded from the incentive.
• Buyer must sign the Owner Occupant Certification Rider to the Real Estate Purchase Addendum.
• If a buyer's total closing costs are under 3.5%, the difference will not be available as a credit to the buyer.

Don't forget, the Fannie Mae Homepath Mortgage does not require an appraisal and there is no private mortgage insurance for credit scores over 660.   Fannie Mae will lend up to the high balance conforming loan limit, which is currently $567,500 in the greater Seattle area.   For more information, click here.

NOTE:  If you're considering a Fannie Mae HomePath Mortgage...I recommend checking out FHA rates which are currently lower, offers down payments as low as 3.5% and the mortgages are assumable.  It never hurts to compare your options!

If you have questions or would like a rate quote for a home located anywhere in Washington, please contact me!

Fannie Mae's HomePath Program

Fannie Mae's HomePath program is available to purchase qualified foreclosed homes (owned by Fannie Mae) with expanded conventional guidelines, competitive mortgage rates and often times, with special incentives.  

Here is some basic information about this program created to purchase Fannie Mae foreclosed homes:

• Property must be eligible.  You can find qualified Fannie Mae HomePath properties by clicking here.
• Up to 97% loan to value for owner occupied.
• Appraisals are not required (if there is no private mortgage insurance).  The property value is determined by the contract price.
• No private mortgage insurance if your credit score is 660 or higher.
• Available with High Balance Conforming loan limits.  In King, Pierce and Snohomish Counties, the current high balance loan limit for a single family dwelling is $567,500 $506,000.
• Available for non-owner occupied purchases with no pmi and no appraisal with as little as 10% down payment!

Fannie Mae is promoting a special offer  of up to 3.5% of the sales prices towards the buyers closing costs as well as a $1500 bonus to selling agents for transactions that close before December 30, 2010.   This offer is for owner occupied/primary residences only and Fannie Mae warns that transactions starting November 15 or later may not be able to close in time to qualify for this offer.

Read more about Fannie Mae's Homepath Mortgage here.

UPDATE April 15, 2011:  Fannie Mae is offering incentives again on transactions closing by June 30, 2011.