Getting a mortgage loan on a foreclosure can be difficult. More and more buyers are discovering HomePath as a bypass to purchasing roadblocks. Learn the pros and cons to see if one’s right for you.
Like many other homebuyers who consider buying a foreclosed home, Chad Kinney was disappointed when he learned it would be difficult to get a mortgage for the property he chose.
The Fannie Mae-owned house that he wanted to buy needed repairs and would likely not pass the property inspection required by mortgage lenders, he was told. That’s when the listing agent suggested he apply for a HomePath mortgage, which doesn’t require mortgage insurance, a property inspection or appraisal and is offered exclusively to borrowers buying homes from Fannie Mae.
“That was the first time I ever heard of HomePath, so I started researching,” he says. “To me, the selling point was my monthly payment is lower and I can get an additional $15,000 for renovations.”
Fannie Mae started offering HomePath loans and HomePath renovation mortgages in 2009 to unload the thousands of homes the agency repossesses through foreclosure.
The little-known program has been gaining popularity in recent months, but many buyers are not aware of it and don’t understand the pros and cons of HomePath financing until a broker or agent suggest it to them, says Brent Kluge of PrimeLending in Timonium, Md.
How HomePath works…