Hi, I am new to this type of loan. I'm looking a some property that has the H.P. approved sign. As is and all that. What, if any, are the "catches" to these loans?
Just a heads up... Just because a house is HomePath approved, doesn't mean you MUST get a HomePath loan. We had better luck with our credit union. I didn't like that only certain banks (a very limited number, imo) would work with HomePath, although there are advantages to it. Whatever fits your needs best. Best of luck to you!
I'm familiar with the Homepath Loan, as a consumer (no expert), but not familiar with the Homepath renovation loan, which is a little tricker. WIth the Homepath financing there aren't a whole lot of catches, I think the interest rate might have been a very tiny bit higher than we could have gotten on a conventional loan, and I think you might need a pretty good credit score to qualify because of the low down payment, but there are a lot of benefits, including needing only 3% down (owner occuppied, or 10% for an investment), and no PMI, low closing costs due to Homepath not requiring an appraisal and maybe a couple other costs. Plus you can get (or we could last year) cash back at closing (request it with your offer if the ad doesn't offer it upfront -- our realtor told us to and they agreed to it). Seems lenders are unfamiliar with the process, too, the first lender we called (a major lender that starts with a "Q" and rhymes with "thicken"), didn't have a clue and would't read up on them so kept processing the GFE incorrectly, charging us fees that shouldn't have been on there -- so we switched and went with a Wells Fargo lender who was also unfamiliar with the Homepath loan but was at least willing to learn about it, and processed it correctly (and enthusiastically, he thought it was a great deal). If you happen to be in the greater Boston area, e-mail me and I can give you his name. All in all it was a great deal for us, would do it again without hesitation.
Thanks for the info. They sell the house "as is" so I am not sure how they come up with a selling price. Seems it is under market value. 3% dn is correct. The renovation feature means they will include enough on the loan to get it up to speed. I think it was a 2nd home in the mountains for someone who couldn't finish it. Kitchen cabinets, garage...etc. I go look at it Saturday.
Homepath homes are owned by Fannie Mae ... they want to sell them. They also don't want to put any more money into them which is why they sell them "as is" or with a renovation loan feature.
The loans offer some concessions that are normally required with regular conventional mortgage financing.
HUGE closing costs - not worth it!