Aug

11

2011

A Smart Option to Look Into When Purchasing: Home Path Mortgages

Aug. 11. 2011

This year I have been very fortunate to represent many buyers. Some were friends, some were friends of friends, some were first time buyers, some were cash buyers buying for their children, some were referrals, and some I met through some means of real estate and started to help! I really do enjoy looking at homes with buyers, trying to figure out their needs, informing them of market conditions, negotiating the best price for everyone, searching for (seriously, countless) hours at the various options they have– not only when it comes to what they are looking for in a home, but the loan they are about to take on in this big purchase.

Currently I am working with a buyer who is in quite the predicament. Here we have this situation:
Option 1:

PROS

  • The EXACT location client wants to be in
  • The (impossible/tight) price range client wants to stay under
  • The rare given opportunity this condo is a 2br (to enlighten, at this price and area, most are 1br)
  • Condo is move in ready and remodeled

Now, THE CONS:

  • Foreclosure
  • Non-warrantable condo
  • First floor? (subjective)

Those are really the only cons, but they make a big difference when it comes to loan options. For some people foreclosures are not seen as a negative, however in dealings with the red tape, lending guidelines, turn around to hear back from banks, and the fact most foreclosures are priced at market value, I am going to say–it is a CON.

Now, onto OPTION 2:

PROS

  • The EXACT location client wants to be in
  • The (impossible/tight) price range client wants to stay under
  • The rare given opportunity this condo is a 2br (to enlighten, at this price and area, most are 1br)
  • Unit same floorplan as option 1 however

CONS:

  • Unremodeled
  • Price doesn’t seem to equate for lack of updating
  • Foreclosure…or is it a con in this instance?

I am going to enlighten you. While the first option was a bank foreclosure, the second option is a Fannie Mae foreclosure. With Fannie Mae comes the Home Path Mortgage. What is a Home Path Mortgage, you ask? Well, I will give you some information and hopefully you can see if this type of loan is right for you.
With a Home Path mortgage you can put 3.5% down. There is no appraisal, and no mortgage insurance. Also, if you close before the end of October on a Home Path Mortgage they will pay a portion of your closings costs. With most other foreclosures you really cannot expect them to pay for anything, you can ask, but don’t hold your breath.

Now, of course your rate is probably going to be a little higher than a conventional loan, but over the lack of mortgage insurance AND fact you can put less down can save you a good chunk of change. On top of that a non-warrantable condo conventional loan can be hard to come by. Here is something to think about too: What if you went the conventional route, get the condo under contract, put more than 20% down, only to find your buy did not appraise for the loan amt. Do you put down more and restructure the loan (that you weren’t planning on giving up in the first place)? If you had decided to go with the Home Path Mortgage, there would have been no appraisal. This can be a very good option for many buyers with not the best credit and not a ton of money to put down. Want to do renovations? Home Path also has a renovation loan as well!

So now we definitely have options, financial options. Does putting down less money and dealing with the headache of a remodel sound appealing? Or paying more per month, with more money down in something that is move in ready?
It will definitely vary from person to person, but just remember there are options! Now if you strictly want to go the Home Path route, because you have maybe not so hot credit and only 3.5% to put down then your options may be fewer, but not impossible. Contact me today to set you up in a Home Path mortgage approved home.
Great reasons to buy:
-Rental rates in Austin at all time high
-Occupancy for rentals 97%, with still an influx of people migrating here (shhh! Stop telling people how great it is here for the sake of traffic!)
-Rates are SUPER low (Did you know in 2006 people were paying 10% interest on homes that were only on the market for a few hours?) Today I received an email rates are at 3.75%!!!!
-Owning a home builds your credit
-Owning a home also makes insurance decrease in some cases
-File homestead and get 15% break
-Most importantly owning a home will make you feel like a cool, responsible adult**

Here are some frequently answered questions regarding Home Path Mortgages:

  • Minimum Down Payment is 3% but 5% is best.
  • Investor’s minimum down payment is 10% down.
  • 2 Unit properties require 20% down regardless of occupancy.
  • 3-4 units require 25% down regardless of occupancy.
  • An appraisal is not required.
  • Regardless of down payment mortgage insurance is not required.
  • Most closings can occur within 30 days.
  • The interest rate is usually .375% higher than market.
  • The payment on a HomePath Mortgage will always be lower than an FHA payment.
  • Condos do not require HOA certificates.  Verification of owner occupancy ratios or percentage of delinquent HOA dues is not required.
  • Condotels are not allowed.
  • Condos in Arizona, California, Florida, Michigan and Nevada are not eligible.
  • Manufactured homes are not eligible.
  • Minimum credit score is 660 unless the down payment is 20% then the minimum score is 620.  No exceptions.
  • The minimum loan amount is $50,000.  The maximum loan amount is $417,000.
  • The seller can pay up to 6% of the sales price towards the borrowers closing costs.  Regardless of loan to value.
  • HomePath is a conventional loan product.

Think this may be something you are interested in? Love to chat with you more!

Ashley Brinkman. 512.665.8787. Prudential Texas Realty. Austin, TX 78731