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For Those About to Buy a Home
For Those About to Buy a Home 
 
I started to get curious about Fannie Mae's HomeReady mortgage program when pricing out loan scenarios that could lean towards either conforming or FHA.  I needed to get a sense of which would provide the better fit for the client.  In so doing, this HomeReady program, about which I knew relatively little, kept splitting the difference.  The age-old question loomed:  Is the scenario a better fit for FHA with its lower interest rates, but higher and permanent mortgage insurance premiums, or is it a better match for conforming, with its higher rates but lower PMI rates that can be removed at a date in the future?  Often a buyer's profile would make the decision for us based on qualifying parameters, but what about those that did not?  Enter the Home Ready program.
 
 
The FNMA HomeReady program is intended to serve low- to moderate-income creditworthy borrowers.  It can permit a 3% down payment, has lenient debt-to-income (DTI) ratios, allows a FICO score down to 620 and at the higher loan-to-values (LTVs), like 10% down through 3% down, the PMI requirement is less, making the premiums cheaper for the client.  However, one of the defining characteristics of HomeReady ... more

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