Why use Fannie Mae Homepath financing ?
What incentives are there for home buyers to use this program? A lot of home buyers and real estate agents in Phoenix, Az are left in the dark about Fannie Mae Homepath financing. To understand what this program is and why you would use this lets get to the nitty gritty.
Fannie Mae Homepath is a loan program that is designed for lending 97% of the purchase price on Fannie Mae owned foreclosure properties. How do you know if this is a Fannie Mae owned property you may ask? Well, there are two easy ways to find this out, one being the yard sign in the front yard having a Fannie Mae Homepath sign rider and two the listing on MLS will note this in the description. If you are still unsure, contact me I will tell you. This particular program is considered a “conventional” type mortgage not a government type loan such as an FHA or VA loan. This program requires the buyer to have 3% for a down payment however this can be a gift from a family member or employer. The program does require a bit higher of a credit score at a 660 versus an FHA loan at 620-640. The home buyer must also be occupying the residence as their primary in order to qualify for 97% loan to value.
Now that we have covered the basics of the Fannie Mae Homepath financing, I want to explain why home buyers would want to pursue this type of loan. To start, unlike the government type loans the conventional loan programs do not follow the “community property” laws in community property states such as Arizona. Let’s use a married couple as an example. With an FHA loan a borrower will have to qualify for the non borrowing spouses debt which in some cases will push the debt to income ratio up to high to approve the loan. Why would a someone be considered a non borrowing spouse? Great question, the answer could be any of the following: The spouses credit score may be too low to meet the loan requirements, or they may not be working and lack qualifying income, or they may have had a recent short sale or foreclosure that would disqualify them from being on the loan. The beauty of a conventional loan will not factor in the non borrowing spouses debt and will help keep the debt to income ratios down to where the loan can be approved.
The next step is contact a licensed mortgage professional and see if you qualify for this program! –Justin, Electric Loan Officer
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