Okay I'm going to establish some parameters here, because there's more to this program than I'm going to discuss
Im going to look at this through the eyes of the first time homebuyer, or somebody buying the property as their primary residence.
and I'm going to compare it to FHA in most cases, also remember this is a program exclusively for FNMA foreclosures, and personally I like what they've done.
how about lookin at;
this is a very nice option that allows those who wish to occupy a property as their primary residence to get the first crack (first look) at the home for a 15 day period. I really like this, and there is nothing else like it available in our industry today (to my knowledge).
or the lack thereof, as there is none. this feature is huuuuuge
or the lack thereof, as once again there is none. the value is the accepted offer. You don't have to pay for an appraisal, you don't have to wait for an appraisal to be completed, you need not be concerned about value.
now, I said it was misunderstood, right? well here goes and I'll try to make sense of the explanation.
the rate appears to be higher, but sometimes higher can be lower and/or have a lower payment.
(for my comparison with FHA I'm going to ignore the taxes and homeowners insurance part of the PITI)
So, I just priced a purchase for both FHA & Homepath
for FHA the rate was 4.875%, for Homepath the rate was 5.25%...there were no points or origination fee for the FHA loan, but there was 1.25 points for the Homepath loan (investors are not aggressive, usually with Homepath financing)
Wait till you see this effect.
I used a purchase price of $125,000 and did the FHA down payment (3.5%) and added back in the upfront MIP of 1.75% that gave me a mortgage amount of $122,735 and a payment of $649.52 at 4.875% I then computed the annual/monthly MI of 1.35% $138.08 and the total is
Now with the same purchase price I used the Homepath down payment of 3% ($625 less) and computed the payment at 5.25% $669.55
I then added, well I didn't add anything, so the payment is
that's $118.05 less
So, now let's add back in some of the missing pieces
Homepath is charging 1.25 pts, and that's $1519, while FHA is no pts.
but the FHA down payment is higher by .5% or $625
the difference being $890 at closing...those $$$ are recovered in about 7.5 months by making the lower payment and you have the lower payment for the life of the loan.
So, everybody should use Homepath, right?
like any other program one program is not for everybody. For example, Homepath is conventional financing, so to speak, and requires a higher credit score and credit profile. For many borrowers FHA is needed.
But, it sure is worth checking out.
so, I hope I've cleared up some of the misunderstandings, and pointed out what it is or may be
Homepath; a program with great benefits