Fannie Mae Homepath Renovation Mortgage Financing?

Andy J.

Andy J.

Doin’ it LIVE
Joined
Nov 5, 2005
Location
Winston
That's a mouthful. Anyone here ever used this? I'm looking at possibly buying one of their foreclosures and was thinking about taking advantage of the renovation money since it's a qualified property. Everything I've read so far states that you can purchase with as little as 5% down and still not have mortgage insurance. The flip side is that the intrerest rates are higher (.5%-1%?).
 
I haven't used it...but I've looked at several properties that qualify for renovation loans. I can't say that I've come across any that don't require PMI, I do know that as of recently, there has been a lot of legislation regarding PMI though. Lots of options out there that allow 5% down...hell, conventionals are even a minimum 5%. FHA is as low as 3.5% (renovation loans available there as well, but PMI NEVER dissolves, you carry it for the life of the loan if you don't put down 20%). USDA has alot in the 1.5% range, and even some 100% financing...but I believe annual income has to be lower than 75k. The less you put down, typically the higher your interest rate will be. Anyway, I said all that to say, there are a ton of renovation options out there, and I have yet to see one that waives PMI. But there are a lot of factors that play a role, primarily the fact that if it's a FM house and you use FM lending, I reckon they can do whatever they want. Location and income play a big role too.
 
True. It's the no PMI with such a low down payment that has me interested. I have a call into a loan officer for further info. I was originally looking to wait another year or two and make a much larger down payment, but if I can get this loan with no PMI then I might jump on it.
 
Hmmm...just did some reading up...and sure enough. Looks like FM self-insures. Also looks like you can put as low as 3% down for a Homepath loan, but interest points really start adding up in the 3-5% downpayment range. I'd go with it depending on what kinda rate you can actually get. The renovation loans I was looking at were all in the 200k neighborhood, I'd put 5% down...and my rates were right at 4.5% as of 2 months ago. Even if you could get it for 5%, I think you'd be golden.
 
Keep in mind mortgage interest is tax deductible, and is likely to stay that way for a while. Tax deduction for PMI ended this year IIRC and is not likely to be renewed. So yet another reason for being OK to take a slightly higher mortgage rate in exchange for ditching PMI.
I wish to hell this had been an option when we bought. I HATE my PMI. Avoid FHA loans if at all possible (I couldn't b/c cost here is so high).
You can do teh math and figure out what the extra % is costing you in the long term.
 
Fannie Mae was walking towards a decision when a glacier ran em over....

They are doable...they move S___L____O____W

The FM Homepath has a rate "penalty" built in already. If you ahev good credit on the open market there are still 4.0s and a few sub 4 rates out there.

We refi'd our PR 18 months ago at 3-1/8 fixed for 30....The mortgage was solf to Wells..they call me every month offering no cost refi's with cash out...no payments for 6,7,9 10 months...they want that 3-1/8 off the books
 
RatLabGuy said:
You can do teh math and figure out what the extra % is costing you in the long term.
Click to expand...

My math on 200k put the break even point right at 24 months for the difference in down payment vs monthly mortgage payment...and over the life of the loan I'd be paying 50k more for an FHA. I figured at that 18-24 month mark I could refinance, but you'll still have to pay the processing fees. I'd be paying at some point...so I'm just gonna go conventional. But if I had the option of 3-5% down and no PMI...I'd eat that up in a second.
 
Ron said:
If you ahev good credit on the open market there are still 4.0s and a few sub 4 rates out there.
Click to expand...

... not w/ 5% down and no PMI...
 
its called negative points
 
We'll see what rate they come back with. I'm not too concerned with the rate as long as it's not rediculous. I'm planning on doing a 15 yr, so that should help.
 
I am in the beginning processes of this Homepath Renovation loan...first time I've heard of it in my home buying experience. What bothers me is that I have to get a licensed contractor to do some if not all the work instead of being able to do it myself and save the money. Have you had that experience?
 
The loan officer told me that I could do the work myself, but they don't pay until the renovations are at least partially complete. The send out an inspector and pay based on the % complete the renovations are. You would have to pay out of pocket for your materials and get reimbursed as you go or after the work was done. An appraiser has to verify the added value to the home.

Edited to add: The loan officer didn't mention how the quote to determine the renovation part of the loan would be done if I did the work myself. I was planning on using a contractor anyway because it would take me forever.
 
Heads up.
If you do the work yourself and they pay you, they WILL 1099 you for the money paid for repairs nd you will owe taxes on it at years end.
 
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