The number of new home buyers dropped precipitously in the late 2000s. That was about the time the housing bubble burst. Moreover, many mortgage companies took advantage of first-time homebuyers, so these families left the market in droves.
But today, the number of first-time homebuyers is rising again. These buyers account for over a third of the market.
Statistically, first-time homebuyers have a much lower income than repeat buyers. So, a home purchase is a much greater financial commitment. Moreover, first-time buyers are much younger than repeat buyers, so they may be less sophisticated real estate customers.
The Fannie Mae HomePath program may be a very good option for first-time buyers. There are some drawbacks to this program, such as a purchase mortgage insurance requirement and interest rates slightly above market levels. But in exchange, homebuyers get a wealth of benefits.
Lower Priced Homes
Fannie Mae’s HomePath inventory consists largely of post-foreclosure homes. As a result, Fannie Mae is not really looking to make money on the mortgage. Instead, the company usually just wants to reduce the previous owner’s debt. That sometimes means a starter-home price for a mid-sized value property.
The money you save on the purchase price almost always offsets the slightly higher rate. In other words, a HomePath property means more home for your money.
Lower Down Payment
HomePath loans usually have a 3 percent down payment. That’s even lower than FHA. For families that struggle to save money leading up to a home purchase, the low down payment is an extremely attractive feature.
Moreover, Fannie Mae is more lenient in terms of the down payment’s source. In most traditional mortgages, the company insists that the buyer provide all the down payment funds. But in a HomePath purchase, the down payment funds can be a gift or an inheritance.
Variable Income Allowance
These more flexible income rules extend to other parts of the qualification process. Some mortgage companies do not include items like renters or boarders. In many cases, the extra few hundred dollars a month can be the difference between getting the loan or being denied.
HomePath accepts these types of income, as well as other types of non-traditional income. Since the house is a post-foreclosure, the bank needs someone in it in a hurry. So, the bank is willing to bend some of the rules.
Fannie Mae is a motivated seller with regard to HomePath properties. Usually, buyers must pay all closing costs, and that cost sharing arrangement is completely non-negotiable. But the motivation once again helps buyers.
In a HomePath purchase, the buyer can contribute up to 6 percent of your inspection fees, title insurance, loan origination fees, and other miscellaneous expenses. That can mean thousands of dollars.
Many other mortgage banks offer similar programs which connect first-time homebuyers with post-foreclosure properties. One big difference is that other banks limit these initiatives to people who will use the property as a primary residence.
But at Fannie Mae, the HomePath incentives are available to buyers who will use the house as an investment property. You may be paying less, but you can still charge market rental rates. That means higher profits.
To take advantage of this program before Fannie Mae ends it, reach out to a provider today.