Our last mortgage post about the Home Path lending program have stirred up some calls in Frisco, and I’m sure other Frisco mortgage companies have run into some of the same questions. There is one very specific detail that I think I should cover as a consultant to someone looking into this program to buy a home in Frisco, or anywhere in America for that matter, where this program is allowed. (See my first post on specific guidelines and understanding of this Home Path Mortgage HERE.)
What was the expected benefit of the Home Path Mortgage over conventional and FHA when it was invented?
Lets “back into” this answer. If you have 20% to put down on a property, it’s going to be rare that you use anything other than the “ole ball and chain” conventional. It is when mortgage insurance is typically used and creates issues in the process, when new programs or unique programs are written…overcome issues that arise from mortgage insurnace restrictions. The Home Path design was to help Fannie Mae foreclosures get bought buy normal buyers in the market. Anytime you deal with foreclosed or bank owned properties, there is many times inspection issues that are detected during the appraisal process. If inspection issues arise, mortgage insurance companies will not bind coverage to such a property unless those issues are cleared-up/fixed before closing. There are a number of people that are fine with doing their own fix-ups on a property, and the Home Path, by design, skips the typical transaction process that uncovers to the lender or underwriter, the details that would call for structural or cosmetic fixes…the appraiser typically mentions in his report about “possible structural or appearance” related issues. The Home Path, as I mentioned in my first post about the Home Path mortgage, doesn’t require an appraisal.
In closing, it is important that you know that this program is only a benefit in few cases because the interest rates are higher on this loan program than typical market rates for FHA or Conventional with low down payments. Do not settle for this program alone unless you have compared them against other programs when the house you are buying is already in sound shape.
If you need someone to help you evaluate the home you are looking to buy, or fit you into the right loan for you, please contact us.