Homepath; a truly misunderstood program (with great benefits)

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Mortgage and Lending with Fairway Independent Mortgage Company 385907

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;

First Look

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).

MI

or the lack thereof, as there is none. this feature is huuuuuge

Appraisal

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.

Rate

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

$787.60

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

$669.55

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?

nope

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

  

 

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Jim Crawford
RE/MAX Paramount Properties - Atlanta, GA
Jim Crawford Atlanta Best Listing Agents & REALTOR

Thanks for taking the time to share this.  Great information for all!

Jul 05, 2013 11:12 PM #1
Rainmaker
281,294
Jay Beckingham
Fairway Independent Mortgage Company - Delray Beach, FL
Seniors ROCK!

Jim,

you're welcome. when we all work together what we can accomplish has no limits.

thanks

jay

Jul 05, 2013 11:42 PM #2
Rainmaker
736,319
Bruce Walter
Keller Williams Realty Lafayette/West Lafayette, Indiana - West Lafayette, IN

Jay, this is excellent information!  One other thing I like in dealing with Fannie Mae foreclosures besides the Homepath financing concerns how easy it is to work through inspections and Fannie Mae will actually make repairs UNLIKE HUD Homes for sale.  This is a great financing option and consumer DO need to look beyond the deceiving higher interest rate and explore ALL the details of the financing and compare to other lending options.  Thanks again, Jay!

Jul 06, 2013 12:29 AM #3
Rainmaker
281,294
Jay Beckingham
Fairway Independent Mortgage Company - Delray Beach, FL
Seniors ROCK!

Bruce,

you're welcome. one of the other happenings making Homepath more attractive was when FHA annual/monthly became a life of the loan thing.

thanks

jay

Jul 06, 2013 12:34 AM #4
Rainmaker
2,445,076
John Pusa
Berkshire Hathaway Home Services Crest - Glendale, CA
Your All Time Realtor With Exceptional Service

Jay - Thank you for the excellent list of information about Homepath, a truly misunderstood program with great benefit.

Jul 06, 2013 03:48 AM #5
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Jay Beckingham

Seniors ROCK!
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