Fannie Mae HomePath offering 3.5% towards closing costs!

mortgageporterraiseFannie Mae HomePath has announced they will offer up to 3.5% towards the buyers closing cost through March 31, 2014. Fannie Mae HomePath properties are homes that Fannie Mae owns through foreclosure. Fannie Mae offers special financing on these homes with reduced down payment, no mortgage insurance and no appraisal required. You can learn more about the Fannie Mae HomePath Mortgage by clicking here.

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Fannie Mae HomePath Minimum Down increased to 5%

This weekend, Fannie Mae will be updating DU (Desktop Underwriter) to reflect the new higher minimum down payment requirements. I’ve written about that here.

This new underwriting guideline will also impact Fannie Mae HomePath mortgages, bringing the minimum down payment from 3% for owner occupied purchases to 5% down.

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Three different 3 Percent Down Conventional Loan Programs

UPDATE February 21, 2014: Conventional financing currently has increased the minimum down payment to 5% from 3% unless you are considering the Home Advantage Mortgage Program. Mortgage programs and guidelines change constantly so please check with your local mortgage professional regarding what is currently available for you. 

I’m pricing out a scenario for a first time home buyer who’s looking at buying a home priced at $250,000 and they have roughly 3% set aside for down payment plus closing cost. Since they have excellent credit, they are leaning towards conventional financing instead of FHA, which has much more expensive mortgage insurance (upfront and monthly).

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What is the Difference Between Fannie Mae Homepath and Freddie Mac Homesteps? [UPDATED]

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. What Fannie Mae Homepath and Freddie Mac Homesteps do have in common is that the properties are generally in better shape than other distressed homes. 

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 126 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 14 homes in Seattle that qualify for Freddie Mac’s Homesteps. 

Current features include:

  • program works with any type of financing, including FHA, conventional, VA and USDA. 
  • $500 allowance to be used towards purchasing a home warranty program (conditions apply)
  • home buyers who are going to occupy (live in) the property qualify to have the first dibs on the home with “First Look Initiative” 

Freddie Mac is in the process of testing a mortgage program in other cities. Their program looks very similar to Fannie Mae’s Homepath and hopefully it’s available in Washington State soon. Freddie Mac offers 3% in closing cost credit if the buyer takes a two part class from Freddie Mac BUT the workshops for these classes are currently not in Washington state.

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

NOTE: This is an updated post from February last year. Mortgage programs and guidelines change constantly.

Qualifying to buy a $200,000 home in Seattle

I’m working with a first time home buyer who’s interested in buying a home priced around $200,000 in the greater Seattle area. I thought I’d share some of the programs we have available at Mortgage Master Service Corporation that may help her accomplish her home buying goals.

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Search for foreclosed homes on Zillow

Zillow has added a “foreclosure center” where you can search for foreclosed homes in your neighborhood. The search includes bank owned homes (REO) and pre-foreclosures (a home that is getting to auction).  

Here’s a snap shot of what Zillow is showing as current foreclosures in West Seattle. The red houses are foreclosures and the blue houses are pre-foreclosures.

Zillow Foreclosure Search
Zillow Foreclosure Search

Home buyers searching for a bargain with a foreclosures or short sale need to be extra patient. These transactions tend to take a lot longer to close as you’re dealing with transactions that will require the approval of the lenders(s) who have interest in the property.  

If you’re considering buying a distressed home, you might want to check out the Fannie Mae Homepath program. Fannie Mae offers special mortgage terms if you buy one of their foreclosed homes specifically designated in the program. Fannie Mae Homepath mortgage allows as little as 10% down payment for investment property with no private mortgage insurance and no appraisal. Those buying a home to occupy can use as little as 3% down, no pmi and no appraisal. Often times, Fannie Mae has made improvements to Homepath properties so they’re in better condition than competing distressed homes.

Freddie Mac offers some incentives to buy their REO’s and I’m told they’re working on creating a program similar to Fannie Mae’s Homepath. At this time, if you’re buying a Freddie Mac foreclosures (Freddie Mac Homesteps), a buyer can use conventional, VA or FHA for financing.

If you are interested in buying a home in greater Seattle or anywhere in Washington, I’m happy to help you. Click one of the links above to apply for a mortgage or get a free rate quote.

Comparing FHA and Conventional Financing for buying a $300,000 Seattle Home

I’m working with a homebuyer who is looking to buy a home in Seattle priced around $300,000 with minimum down payment. Rates are based as of October 15, 2012 5:00 pm with excellent credit (scores of 740 or higher) using a 30 year fixed rate. For your personal rate quote based on current pricing for a home located in Washington, click here.

We’re also using rebate pricing to pay for closing cost to keep the amount of funds needed for closing at a minimum. Quotes below are for a single family detached (non-condo) dwelling. Rates based on closing just in time for Thanksgiving on 11/21/2012 (less than 40 days away – can you believe it).

Conventional 30 Year Fixed with 5% down payment:

3.500% (apr 3.967) provides a PIMI (principal, interest plus mortgage insurance) payment of $1,424.16. Net closing cost (not including prepaids and reserves) are $290. NOTE: for prepaids and reserves, factor having 14 months of home owners insurance and around six months taxes collected (depending on when your first month’s payment is due).

3.250% (apr 3.704) has a PIMI payment of $1,394.72 (taxes and home owners insurance are additional). Closing cost are estimated at $3140 (not including prepaids/reserves).

NOTE: with conventional financing at 5% down, the seller can contribute up to 3% of the bona fide closing costs, prepaids and reserves. Buyer must meet the down payment requirements of 5% ($15,000 for this scenario).

Fannie Mae Homepath with 5% down payment (you can put down as little as 3% with this program, which will impact the mortgage rate).  Fannie Mae Homepath is only for specific properties (Fannie Mae foreclosures) and does not require an appraisal nor mortgage insurance. Click here to learn more about Fannie Mae Homepath for homes located in Washington.

3.875% (apr 3.963) with PITI (no mortgage insurance!) of $1,340.18 with net closing cost of $3400, not including prepaids and reserves. Seller can pay all prepaids and reserves if negotiated into the contract.

FHA 30 Year Fixed with 5% down payment (NOTE: FHA has both upfront and monthly mortgage insurance).

3.00% (apr 3.831) with PIMI of $1504.89 and net closing cost of $2134 excluding prepaids and reserves. Minimum down payment of $15,000 required – the seller can pay the closing costs, prepaids and reserves up to 6% if negotiated in the purchase and sales agreement.

FHA 30 year Fixed with 3.5% down payment: the only difference in pricing is slight with the monthly mortgage insurance. 

3.00% (apr 3.890) with PIMI of $1538.59 and net closing cost of $2120 not including prepaids and reserves. Minimum borrower investment is 3.5% down of $10,500. The seller can pay prepaids and reserves if negotiated in the purchase and sales agreement up to 6% of the sales price.

If the borrower served the military, they might qualify for a VA loan which would allow for zero down in this scenario. And a home not in Seattle, in a  rural location with borrowers who meet the income limitations, may qualify for a zero down USDA loan.

If you have questions or are interested in getting preapproved for a mortgage for a home located anywhere in Washington, please contact me.

Mortgage Rates for Investment Property in Issaquah, Index, Ilwaco and beyond in Washington State

I was just approving a comment from an old post that I wrote at Rain City Guide about buying investment properties which included rate quotes. Mortgage rates are currently so much lower, I thought I’d use this as an opportunity to share just how low they are for investment property.  

The following quotes are based on having credit scores of 740 or higher and are based on a single family dwelling priced at $300,000 for a non-owner occupied home with a 30 year fixed rate mortgage.  Rates are effective as of 3:00 pm on September 21, 2012 and may change at any time. 

20% down payment: 3.750% (apr 3.955) priced with 1.247 in discount points (no origination points). Principal and interest payment (P&I) = $1,111.48 (taxes and insurance are additional).

25% down payment: 3.500% (apr 3.655) priced with 0.627 in discount points. P&I = $1,010.35.

30% down payment: 3.375% (apr 3.597) priced with 1.375 in discount points. P&I = $928.40.

If you can find a Fannie Mae REO for your next investment property, you can use the Fannie Mae Homepath mortgage program and buy it using only 10% down payment with no private mortgage insurance or appraisal required:

10% down Fannie Mae Homepath:  4.125% (apr 4.282) priced with 0.990 in discount points. P&I = $1,308.55.

Rates are effective as of 3:00 pm on September 21, 2012 and may change at any time. For your personal rate quote for a home located anywhere in Washington, please contact me.