Home Path Mortgage Offers Low-Cost Fannie Mae Bank Owned Foreclosure Homes

Fannie Mae’s Home Path Mortgage is a home buying program that offers incentives to individuals who buy bank owned foreclosures. The Home Path program allows buyers to purchase Fannie Mae homes with reduced down payments and closing costs, along with flexible mortgage terms. Other incentives include elimination of home appraisal fees and mortgage insurance.
The Home Path Mortgage program provides two financing options. The first option is similar to a conventional home loan and is available to individuals who purchase a Fannie Mae foreclosure home as their primary residence. The second option is Home Path renovation mortgage financing and provides additional funds to make light repairs. Both finance options require buyers to obtain funding through an approved lender.
Home Path properties are owned by Fannie Mae and obtained through repossession and forfeiture. Properties include single family homes, townhomes and individual condo units. Properties are sold “as is” and often require some level of renovation. Buyers should obtain a home inspection prior to signing closing contracts.
Under the Home Path program, buyers must provide a minimum 3-percent down payment; making this a good choice for buyers who do not have the necessary funds for conventional financing. A major perk is borrowers can utilize funds obtained from outside sources to meet the down payment requirement. FHA is the only other program that allows down payment assistance.
One option for obtaining down payment assistance grant money to buy bank owned foreclosure real estate is the Neighborhood Stabilization Program offered through the Department of Housing and Urban Development. Billions of dollars have been earmarked for NSP grants to help stabilize communities hit hard by foreclosure.
NSP grant money can be used to buy Fannie Mae foreclosures offered through the Home Path mortgage program. NSP funds are managed by a variety of nationwide partners. Home buyers will need to contact their state’s Neighborhood Stabilization Program manager. A list of NSP grant partners is provided at HUD.gov.
Buyers of Fannie Mae real estate must obtain bank prequalification before submitting their offer. Prequalification does not guarantee home loan financing will be approved. Instead, it is used to determine how much buyers can afford to borrow.
First time home buyers who purchase Home Path properties prior to April 30, 2010 qualify for the $8000 federal housing tax credit. Homeowners who have resided in their home for at least five years and purchase a Fannie Mae foreclosure home with a higher value can obtain a $6500 tax credit. Individuals should consult with a professional tax preparer to ensure they are entitled to home buying tax credits.
The Home Path mortgage program is also a good option for real estate investors to purchase discounted investment properties. Investors can apply for NSP grant money, but cannot take housing tax credits against purchased properties. Unless investors obtain an NSP grant, they must wait 15 days after the property is listed before making an offer.
Home Path properties are sold under the “first look” provision. Buyers who receive down payment assistance and grant money are given first dibs during the first 15 days. If no offers are presented, real estate investors can submit offers on up to five properties through a Fannie Mae broker.
It is important to note not all Fannie Mae homes are eligible for special financing. Only properties listed at the HomePath.com website qualify.