In an effort to step up government assistance in purchasing a home, Fannie Mae will help potential home buyers with their closing costs. Those that purchase a Fannie-Mae “Home Path” home are eligible for up to 3.5 percent closing costs assistance.
What is “Home Path”?
Home Path homes are Fannie Mae foreclosures; these are properties that were foreclosed by the lender and Fannie Mae was the investor. Because Fannie Mae holds these loans, they can amend their own guidelines and as a result, offer great benefits if you purchase one of these properties.
• One of the best benefits is that the Home Path program only requires 3% down payment versus the usual 3.5 percent
• The Home Path loan program also doesn’t require monthly mortgage insurance; PMI is required for mortgages that have a loan balance that is greater than 80% of the home’s value or sales price
• No appraisal is required; the home loan will be based strictly on the sales price
• The benefits of no appraisal or mortgage insurance can eliminate some challenges that can come up in an escrow transaction
Eligibility Guidelines
This particular assistance from Fannie Mae is only being offered until June 30th; the initial offer must be made on or after April 11, and the sale must close on or before June 30, 2011, to be eligible for the incentive.
Additionally, buyers must live in the home as their primary residence, as sales to investors are not eligible for this incentive.
**Investors are eligible to purchase a Home Path property, but cannot get this incentive of 3.5 percent towards the closing costs. Investors are only required to pay 10 percent of the home price as a down payment and they can buy up to 10 Home Path-listed homes using the financing plans.
But What if the Home Path Foreclosure is a Fixer Upper?
Fannie Mae offers Home Path renovation loans however the properties that are eligible for these loans have already been identified and are listed on the Home Path website. Both owner-occupants and investors can qualify for Home Path Renovation loans but you must start by reviewing the Home Path website to see which of the homes are eligible for this type of loan.
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