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- What Are Netting Escrows & How Does It Work?: The Best Guide - January 2, 2024
- The Secret About Prescriptive Easement: Top Guide 1 Must Know - December 4, 2023
- About Home Equity Loans In Texas And How Can One Obtain It - November 27, 2023
About HomePath Ready Buyer Program
As it is the dream of every American to own a home not many have attained it. With the high-interest rates, strict mortgage qualifications high rents, student loan debt, and overheated real estate markets even those with well-paid salaries find it difficult to save for a down payment and closing costs.
With these issues being faced by maximum Americans, Fannie Mae has developed a comprehensive program, which has low down payment options, so they can meet the needs of prospective homebuyers.
HomePath Ready Buyer Program is one aspect of such an option.
Justin Herring, the Director of Product Development with Rocket Mortgage says this program is a boon for first-time homebuyers.
Herring says, even though the end date for this program hasn’t been announced by Fannie Mae, clients to take advantage of this great offer now, while the rates are still relatively low.
What is the HomePath Ready Buyer Program?
The first-time homebuyers get up to 3% of the purchase price back in the form of closing cost assistance on Fannie Mae-owned HomePath properties by this HomePath Ready Buyer program.
What Is Fannie Mae?
Fannie Mae which is called The Federal National Mortgage Association is a government-sponsored enterprise with a twofold mission.
In 1938, during the Great Depression, Fannie Mae was created, to keep mortgage lenders liquid.
The mortgages originated by lenders are bought by Fannie and then are repackaged for sale to investors on the secondary mortgage market.
Also by offering incentives and assistance during the mortgage application process, Fannie Mae helps prospective home buyers with low- and moderate-income to be able to afford homeownership.
What are HomePath properties?
Fannie Mae takes back the ownership of a borrower’s home if they default on the Fannie Mae-backed qualifying mortgages, through a deed in lieu of foreclosure transfer.
The defaulted borrowers who are not able to catch up on their mortgage payments sign their homes over to Fannie Mae to avoid having a foreclosure on their credit history.
Because foreclosures can take a long time, Fannie Mae gets these houses back onto the market quickly so that the house does not sit vacantly or suffer damage by the owners who know they will ultimately face eviction.
If the foreclosure doesn’t sell at auction then they end up back in Fannie Mae’s portfolio, to be listed on their site.
The working of HomePath Ready Buyer Program
The general public can get access to these homes on sale offered by Fannie Mae through HomePath.com. Once you find your next home on the site you need to:
Contact A Real Estate Agent to buy a home from HomePath.com you need to work with a real estate agent.
To help make sure homebuyers understand exactly what they’re buying when they purchase a real estate-owned (REO) home through HomePath Fannie Mae insists on using the real estate agent.
You as a buyer must complete 4-6 hours of The HomePath Ready Buyer class which is offered online.
The fee to complete the course is $75 which will be reimbursed if you close on a HomePath home as part of your closing cost assistance. The course cover topic like –
- Preparing you with the responsibility of homeownership
- Are you ready for owning a home
- Identifying your affordability on spending on your new home
- Understanding mortgage application process and credit
- Deciding which home is fit for you.
You will print out your Certificate of Completion once you complete the HomePath Ready Buyer program, and give it to your real estate agent. They will submit the certificate along with your offer on a HomePath home.
Reward at closing of HomePath home
You’ll get a credit of up to 3% of the purchase price on closing day, toward your closing costs.
Supposing you’re buying a home for $200,000. Your credit would be $6,000, including the online signing up fees of $75.
Also because you won’t be required to have an appraisal completed for the lender’s consideration your closing costs are generally lower.
But you don’t get any additional credit because your closing cost credit exceeds your actual closing costs. Saving you a huge sum of cash on closing day.
Who is Eligible for Closing Cost Assistance?
The few eligibility requirements are:
- You are eligible only if you are a first-time homebuyer. If you have a co-buyer then at least one of you must complete the HomePath Ready Buyer course.
- Within 60 days of closing the home must be your primary residence.
- Tenants are eligible to buy homes in tenant-occupied properties through this program.
It must be a Fannie Mae-owned HomePath property.
Advantages of Buying a HomePath Home
Homes are Priced to Sell
A home that was originally purchased with a mortgage, and Fannie Mae probably purchased that mortgage from the originating lender and if the homeowner defaulted, and signed the deed in lieu of the property didn’t sell at auction, then the home is offered for resale by Fannie Mae.
Fannie Mae is not interested in managing properties but in the business of buying mortgages from lenders so it prices homes at a discount so that they sell quickly.
Low Down Payment
You’ll only be required to make a 3% down payment when you apply for a HomePath Ready Buyer, Home Ready, or a Fannie Mae 97% LTV Standard mortgage for first-time buyers to buy a HomePath home.
The Chenoa Fund, Community Seconds, or local resources can also be used for assistance in securing down payment.
Down payment assistance options that require repayment or a lien to be placed on the property are not funded by Rocket Mortgage.
Renovate with a HomeStyle Renovation or HomeStyle® Energy Loan
You can borrow money with a HomeStyle Renovation or HomeStyle Energy Loan if you find a HomePath home that is in need of renovations or energy-efficiency upgrades.
At the closing of the primary mortgage, these loans are issued, and they can be up to 75% of the home’s value after the renovations are completed or 75% of the purchase price with added renovation costs.
Your payments are wrapped into one monthly payment with no second mortgage or home equity line of credit (HELOC).
Cancellable Mortgage Insurance Payments
You must pay for private mortgage insurance, or PMI, on a conventional loan, or mortgage insurance premiums, or MIPs, on FHA loans when you have less than a 20% down payment, should you default on the loan these insurance policies protect the lenders.
With all conventional mortgages, including those issued by Fannie Mae, the PMI can be canceled when the mortgagee reaches the threshold of 20% equity with a written request and confirmation of property value.
Closing Cost Assistance
When you complete the online HomeReady Home Buying course, 3% of the purchase price is credited toward your closing costs when you purchase a HomePath home as a first-time homebuyer.
As part of your closing cost assistance the course fees of $75, are returned to you when you close on a HomePath home.
The process is very simple after you complete the course, and print your certificate of completion you give it to your real estate agent to submit along with your offer.
Conclusion
Since the HomePath homes are sold in as-is condition, meaning neither will Fannie Mae make any repairs to the property nor will it offer any warranties?
So it is up to home buyers to make sure that they understand exactly what they are taking on when they purchase a HomePath property.
Get a thorough home inspection to be sure what are the repairs that you need to take care of.
Precisely the reason, HomePath requires prospective home buyers to work with an approved real estate agent, to see that home buyers are not taking on more repairs than they can handle.
The agent ensures that all problems are fully disclosed to you and you understand exactly what you are getting into.
It is also not an easy task to find a HomePath property in your area to buy under this program.
The HomePath Ready Buyer program was introduced to help Fannie Mae get a lot of foreclosed homes off their books.
You may have to expand your search area and be patient to find a HomePath property that works for you.
