The Home Path Mortgage, a home buying program by Fannie Mae, offers incentives to people who purchase bank owned foreclosures. This program enables individuals to buy Fannie Mae homes with low down payments and closing costs, as well as flexible mortgage terms. Additional incentives include absence of mortgage insurance and home appraisal fees. Fannie Mae owned Home Path properties can be obtained through forfeiture and repossession. Properties include individual condo units, townhomes and family homes. Properties are sold on an ‘as is’ basis and often need some renovation. It is important that buyers obtain home inspection before closing contracts.
The Home Path program requires buyers to provide a minimum down payment of only 3%. This is beneficial especially to buyers who cannot afford conventional financing. Buyers can fund this down payment using own savings, grants, gifts, loan from a nonprofit organization, local government, state or employer. The only other program that offers down payment assistance is FHA. One way of obtaining grant money for down payment assistance is the Neighborhood Stabilization Program (NSP) which is under the Department of Housing and Urban Development (HUD). HUD has set aside billions to be spent on assisting communities affected most by foreclosure. To benefit from these grants, home buyers are required to get in touch with their state’s NSP manager.
Home Path Mortgage provides two options for financing. The first option is a conventional home loan that can be accessed by individuals who buy a Fannie Mae foreclosure as their main residence. The second financing alternative is Home Path renovation mortgage, which provides additional funds to carry out small repairs. For each of these options, the buyer must get funding through a legitimate lender. Before submitting an offer, buyers of Fannie Mae properties must get bank prequalification. However, prequalification does not guarantee the approval of home loan financing. Its primary purpose is to establish how much buyers can afford to borrow.
First time home buyers who purchase Home Path properties before June 30, 2010 will be eligible for an $8000 federal housing tax credit. Homeowners who have lived in their home for at least five years and purchase a Fannie Mae foreclosure home at a higher price can get a $6500 tax credit. Buyers should consult with a tax expert to ascertain that they are eligible for home buying credits. Real estate investors who want to buy discounted investment properties can also benefit from the Home Path mortgage program. Though they can apply for NSP grant money, investors cannot receive housing tax credits on purchased properties. If investors do not obtain an NSP grant, there is 15-day waiting period before an offer can be made.
Home Path properties are sold according to the ‘first look’ provision. Buyers who obtain grant money and down payment assistance are given first priority during the first 15 days of bidding. If no offers are forthcoming, real estate investors are welcome to submit offers through a Fannie Mae broker.
As you can see, Home Path loans are full of many rules and regulations. Your first step to determining whether a foreclosure will work for you is to find foreclosures in your area. Then read up on what types of foreclosures are available. Good luck, and happy hunting!
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