HomePath Renovation Vs. FHA 203k Loan: One More Reason To Use HomePath

By
Mortgage and Lending with Millennial Home Loans, LLC NMLS #133925

HomePath Renovation Vs. FHA 203k Loan:  One More Reason To Use HomePath Financing

Starting April 18, 2011 the factorial used to determine annual mortgage insurance premiums for a FHA 203k loan will increase .25%.  Based on today's annual mortgage insurance premium rate of .9%, with a 3.5% down payment on a 30 year mortgage, the .25% increase will result in a new rate of 1.15%.  

Assuming a $200,000 loan amount the increase in mortgage insurance rates will cost the borrower an additional $41.66 per month.  To determine the impact on a FHA borrowers monthly payment start by taking the monthly mortgage insurance premium factorial at .000958 (1.15%/12) and multiplying against the outstanding principal balance.    Compare this using the old factorial of .00075 (.9%/12).  This mortgage insurance change is calculated as follows:

  • Current Premium:  .009/12 * $200,000 = $150.00
  • New FHA Premium:  .0115/12 * $200,000 = $191.66

This increase in monthly mortgage insurance premiums should be one more reason why home buyers considering purchasing a Fannie Mae REO in need of repairs should use the HomePath Renovation Loan since

  • There is no monthly mortgage insurance premium with the HomePath Renovation Loan Program.  This means that the monthly payment on the HomePath Renovation Loan is actually less than a comparable fixed rate FHA Loan even though the HomePath Renovation Loan typically has a .50 to .75% higher interest rate, based on the borrowers credit score and down payment, than a FHA 203k Renovation Loan.
  • No upfront mortgage insurance premium required on the HomePath Renovation Loan while the FHA 203k Renovation loan has a 1% upfront mortgage insurance premium.
  • Fannie Mae Asset Managers seem to have a preference for the HomePath and HomePath Renovation loan program over the standard FHA and FHA 203k loan program, which results in offers backed by Fannie Mae financing having a higher likelihood of being accepted. 

To learn more about your HomePath Renovation Financing options using the HomePath Renovation Loan Program go to HomePath-Renovation.com or email info@homepath-renovation.com.  I specialize in HomePath Renovation Loan Financing.  I am approved to lend nationwide and can be reached at (866) 351-3229.

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Mortgages
Realtors Needing the services of the Lending Powers
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Maryland Real Estate and Mortgage Group
Tags:
mortgage insurance premium
homepath
homepath renovation
homepath renovation calculator
homepath renovation vs fha 203k

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Ambassador
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Harry F. D'Elia
RentVest - Phoenix, AZ
Investor , Mentor, GRI, Radio, CIPS, REOs, ABR

HomePath loans work great with real estate investors in my opinion for my local market.

Mar 06, 2011 01:39 AM #1
Rainmaker
785,488
Dan Edward Phillips
Dan Edward Phillips - Eureka, CA
Realtor and Broker/Owner

Good Morning David, excellent input on Home Path financing.

Mar 06, 2011 02:38 AM #2
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Paul McFadden
Paratex - Seattle, WA
Pest Control, Seattle, WA.

David: Thanks. I recently did one of these loans and my only comment is it's easier to keep a 203-k loan in house. I understand sometimes a borrower has to do Homepath Renovation but the loan officer loses control on a brokered loan. At least that was my experience. Thanks for the post!

Mar 08, 2011 09:03 AM #3
Rainer
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David Zuckerman
Millennial Home Loans, LLC - Sykesville, MD
Mortgage Broker - Low-to-no downpayment mortgages

Harry, I agree that HomePath is a fantastic tool for investors since they would otherwise need 20% down on a standard investor transaction

Paul, I am a little spoiled on this topic since I'm a Loan Officer at Flagstar Bank, which is one of a very few lenders originating the HomePath Renovation loan.  Thus I have the ability to originate these loans in-house as a direct lender. 

Mar 09, 2011 11:43 AM #4
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David Zuckerman

Mortgage Broker - Low-to-no downpayment mortgages
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