The post How to Buy a Fannie Mae HomePath Property by Lawrence Guantero appeared first on Benzinga. Visit Benzinga to get more great content like this.
If you’re planning to buy your dream property, a Fannie Mae HomePath home could offer the opportunity to secure the home for less. Fannie Mae’s HomePath Ready Buyer program allows you to buy a foreclosed property with as little as a 3% down payment. You can also get up to 3% closing cost assistance. If you can’t afford a standard mortgage, HomePath could be a good option. Read on to understand how to buy a Fannie Mae HomePath property here.
Table of contents
[Show]
What Is a Fannie Mae HomePath Property?
HomePath is a Fannie Mae program designed to help you move into a foreclosed home with financial assistance. You can purchase the home with a low downpayment for a HomePath conventional mortgage.
A HomePath property is a foreclosed property that may include single-family homes, condominiums, townhouses, manufactured homes and plots of land. The types of properties and sale prices vary widely by the local housing market, the home’s condition and additional factors. While many properties are move-in ready, others require repairs or extensive renovations.
The properties are usually properties that Fannie Mae has taken control of through a process called a deed in lieu of foreclosure. According to this financial agreement, the homeowner gives the lender the deed to their home to avoid foreclosure.
Homes given up through a deed in lieu of foreclosure agreement are usually in better shape than homes seized through foreclosure. When the latter occurs, those homes tend to be in much worse condition, either because the previous owner didn’t have the funds for the upkeep or wasn’t motivated to maintain a property they were about to lose.
In addition, Fannie Mae hires property maintenance companies to maintain and prepare the properties for the market and to enforce quality control. Fannie Mae works with local municipalities to ensure the home complies with local codes and requirements.
In some cases, you might find Fannie Mae properties with upgrades or amenities such as environmentally friendly upgrades. This can include:
- Smart thermostats
- LED bulbs
- Energy-efficient water heaters
- Upgrades to reduce water waste, like low-flow bathroom faucets and toilets
- Recycled materials, such as flooring or carpeting
What Are the Requirements for a HomePath Property?
To buy a HomePath property, you must be a low-income borrower with limited cash for a down payment. You must meet minimum credit score and debt-to-income ratio (DTI) requirements and cannot have owned a house within the last three years. You must also use the property as your primary residence within 60 days of closing. To increase your chances of approval, you will need to have:
- 3% for the down payment
- A credit score of at least 620
- A maximum DTI of 50%
In addition, you could buy a Fannie Mae HomePath home with a U.S. Department of Agriculture (USDA) loan or a Veterans Affairs (VA) loan to buy the property with 0% down if the home you’re interested in is in move-in condition.
How to Buy a Fannie Mae HomePath Property
If you’re ready to buy a Fannie Mae HomePath property, here are the steps.
1. Contact a Real Estate Agent
A real estate agent registered with HomePath to assist with the purchase process can help you identify local properties and other opportunities. Fannie Mae only accepts offers from Fannie-approved listing agents. The real estate agent must submit an offer online.
When choosing a real estate agent, consider a professional with experience with Fannie Mae, who knows your target market and is responsive and proactive to help you secure a home.
2. Secure a Preapproval from a Lender
Getting a mortgage lender preapproval will show you how much you can afford and help assure the real estate agent and seller that you’re ready to purchase a home. To get mortgage preapproval, you can submit your application to multiple Fannie Mae-approved lenders to find the best available offers. Preapprovals aren’t required for HomePath properties, but it can put you in a better position to close quickly.
3. Make an Offer on the Desired Property
While you’re searching for properties, you can filter search results by price, number of bedrooms and bathrooms, property type, listing type, square footage, age or other factors. Once you locate a HomePath property you want to purchase, you can submit an offer through your real estate agent.
Note that if you want to apply for closing cost assistance, you must complete a buyer education course before submitting the offer. You can take HomePath’s Ready Buyer program online. The nine-module course covers common mortgage and homeownership topics such as setting a reasonable budget and how to choose a property. It takes four to six hours to complete the course and costs $75. If you close on a HomePath property, you’ll get the $75 reimbursed.
4. Negotiate the Purchase Price and Terms
When you find a property you like, it’s time to make an offer. This may involve negotiation with Fannie Mae. Your Fannie Mae-approved real estate agent can help guide you through the negotiation and closing. You can also ask your representative to include a request for closing cost assistance in the offer.
5. Complete the Necessary Paperwork
The necessary paperwork will include a purchase and sales contract with any contingencies, addendums and disclosures.
6. Conduct Inspections on the Property
While Fannie Mae sells HomePath properties as-is, you can still conduct a property inspection to identify any potential issues or repairs needed so you understand the condition of the property you’re planning to purchase.
7. Secure Financing for the Purchase
Once your offer is accepted, you must finalize the mortgage application. Complete any required documentation for the mortgage lender, which typically includes:
- Government-issued ID
- Proof of income such as W-2s or pay stubs
- Bank statements
- Information on any other assets, such as savings accounts or retirement accounts
- Information on total debt or liabilities
You can speak with the lender during the preapproval process to understand whether there are any other options.
8. Close the Sale
Once you’ve secured the financing and any other contingencies have been met, it’s time to sign the necessary paperwork, including the purchase contract and transfer funds. Congratulations! You’ve purchased a HomePath home, and it’s time to move into your new home.
Pros of Buying a HomePath Property
Buying a HomePath property has numerous benefits, from lower total costs to flexible approvals. Below are some of the pros:
- Potential low down payments
- Flexible mortgage terms
- Waived lender-required appraisals or mortgage insurance
- Possibility of closing cost assistance
Cons of Buying a HomePath Property
Buying a HomePath property has a few disadvantages you should weigh, including:
- Homes that nearly went into foreclosure may have deferred maintenance or other issues
- The home is sold as-is and may need significant repairs
- HomePath properties are only available to buyers whose income is under the stated maximum
Buying Your Dream Home
Fannie Mae’s HomePath program offers a path to homeownership for more families. Fannie Mae’s Ready Buyer program means you could buy your first home for as little as 3% down. You could even qualify for up to 3% in closing cost reimbursement. Looking for other options? Find the best mortgage lenders here.
Frequently Asked Questions
How can I find Fannie Mae HomePath properties?
You can find a Fannie Mae HomePath property in the HomePath database. You can search by price, number of bedrooms, ZIP code and more.
Answer Link
Can I use down payment assistance programs for Fannie Mae HomePath properties?
Yes, in some cases, you may qualify for Fannie Mae’s down payment assistance programs on HomePath properties.
Answer Link
What happens if my offer on a Fannie Mae HomePath property is not accepted?
If your Fannie Mae HomePath offer isn’t accepted, you’ll have to consider why it wasn’t accepted. This could be because you don’t meet income or other financial requirements or because the offer was too low. You can consider the reasons and submit another offer. For example, Fannie Mae doesn’t accept HomePath home offers contingent upon selling another home because you cannot have owned a home for three years.
Answer Link
The post How to Buy a Fannie Mae HomePath Property by Lawrence Guantero appeared first on Benzinga. Visit Benzinga to get more great content like this.