This is the first of a few posts regarding financing options for buying a foreclosed home. HUD has a great program for buying their homes for only $100 down. They also escrow repair money for needed repairs (so the home meets HUD guidelines) and they will also contribute closing costs. However, FHA/HUD financing only became popular (again) in the last year or so due to home values dropping and other financing options drying up. They will also only lend if the home will be your primary residence. Fannie Mae and Freddie Mac also have their own programs that are available to investors as well. The program from Fannie Mae is called "Home Path".
With the number of REO properties increasing, These programs are becoming more popular. HomePath financing is available for Fannie Mae REO's with the HomePath logo found on HomePath.com. As of today, there are about 136 properties in Los Angeles that are eligible for this financing. I've personally noticed a significant increase in questions about this financing so I thought I would cover the basics. First, there are two types: a HomePath Mortgage and a HomePath Renovation Mortgage. The difference being, the HomePath Renovation Mortgage will allow minor fixes to the property much like the HUD $100 Repo program.
Here is a quick synopsis of the HomePath Mortgage:
- Minimum 3% down for primary residence, 10% down investment property
- Borrower can own up to 10 financed properties (but need 25% down if they own more than 4)
- No appraisal fees
- NO MORTGAGE INSURANCE (Trumps FHA!)
- High balance (jumbo) and interest only products available
- Seller contributions can be 6-9% on primary residence (the larger the down payment, the larger the allowable contribution), only 2% on investment property
- Less than perfect credit can be OK
If you have any questions about this product feel free to drop me a line! I will post details on other foreclosure financing options in my next entry.
Michael Wolff
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