HomePath and HomeSteps are financing programs offered by Fannie Mae and Freddie Mac to finance their own REOs (properties they own and are selling). The two most notable advantages of each program are: (1) no appraisal required; and (2) no mortgage insurance required.
While Homepath and Homesteps financing often appears attractive, the interest rates associated with the programs are relatively high compared to FHA and Conventional financing alternatives.
We invite our clients to ask one of our Mortgage Analysts to run comparison scenarios so an informed choice can be made.
Sometimes Homepath or Homesteps financing is the only option because buyers need to take advantage of the fact that no appraisal is required. This is the case when a property is in poor condition or when it has unpermitted space or units that would not be allowed with FHA or Conventional financing.
Below are some guidelines surrounding both financing options.
Fannie Mae, HomePath® Financing:
HomePath financing is available only on Fannie Mae-owned properties and is available for move-in ready properties for both owner occupants and investors.
Properties must be eligible for HomePath financing and can be found by checking the Fannie Mae Homepath website: http://www.homepath.com
Highlights for HomePath financing include:
• As little as 3% down on primary residence
• 90% financing for Second Homes and Investment Properties
• No appraisal required
• No mortgage insurance (MI) is required – although Fannie Mae price adjusters will apply
• Flexible mortgage terms – including fixed-rate, ARMs or the Interest-Only payment feature*
• Min 620 score for 80% or lower LTV
• Min 660 score for 80.01% and above LTV
• FNMA Desktop Originator/Underwriter® Approve/Eligible Required**
• Max Debt-to-income ratio is 45%
Freddie Mac, HomeSteps® Financing:
HomeSteps® is the Freddie Mac sales unit responsible for marketing and selling Freddie Mac real estate owned (REO) homes to homeowners and investors.
Similar to HomePath, properties must be eligible for HomeSteps financing and can be found by checking the Freddie Mac HomeSteps page: http://www.homesteps.com
Highlights for HomePath financing include:
• As little as 5% down for down payment
• No Appraisal
• No Mortgage Insurance
• Flexible mortgage terms – including fixed-rate, ARMs or the Interest-Only payment feature*
• Two-year home warranty included
• Discount on Appliance Purchases
• Available option for 3% towards closing costs
* HomePath and HomeSteps financing is available only to qualified borrowers and the programs are subject to change without notice. Underwriting terms and conditions apply, and some restrictions may apply. Must check respective websites for the most up-to-date information.
Real Estate Broker, CA Dept of Real Estate, DRE# 01524255, NMLS# 335646
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