Comments on: Battle of the Home Mortgage Products: FHA vs. Fannie Mae HomePath

By: Gary Miljour

Gary Miljour — Fri, 20 Aug 2010 21:42:19 +0000

Rates are about 7/8% to 1% higher on the homepath product compared to an FHA loan for a primary residence. The costs equal out because you have to charge more upfront origination cost on homepath, but they do not have the built in upfront FHA insurance. I just analyzed a borrower yesterday going FHA putting the 3.5% down vs. homepath’s 3% and the FHA loan was a far superior product for the primary residence. Again I really like homepath, but it is a niche product based on certain criteria and situations.

By: Amanda M

Amanda M — Fri, 20 Aug 2010 18:26:46 +0000

Can you please provide a rough estimate on how much higher HomePath interest rates are vs FHA vs Conventional? And are rates even higher if doing the renovation loan? Are we talking +/- 1.000%, or are they really hitting you hard with +/- 3.000%-4.000%++ ?
Many thanks in advance,
Amanda

By: Gary Miljour

Gary Miljour — Tue, 22 Jun 2010 16:52:03 +0000

You are Welcome. Good luck, and if you need my advice of assistance further, please do not hesitate to contact me again.

By: Ellie

Ellie — Mon, 21 Jun 2010 23:46:42 +0000

Thanks Gary,

Our broker did advise of the 203K and that is what we were investigating. Thank you for your advice.

By: Gary Miljour

Gary Miljour — Mon, 21 Jun 2010 20:38:03 +0000

Dear Ellie,

Most real estate agents push a product based on simplicity of closing and not what could be the best for the client. Personally I would not take mortgage advice from a real estate professional, but get your advice from your mortgage broker. FHA does have a renovation loan as well called a FHA 203K loan. This might be a better option. Please understand that you are in control of your mortgage decision. It is not your real estate agent’s. Good luck, hope this information helps. Also dollar for dollar the FHA loan will be your cheaper option.

By: Ellie

Ellie — Sun, 20 Jun 2010 15:11:54 +0000

Hi Gary,

My husband and I made an offer on a Foreclosure. We are using a mortgage broker and were planning on using an FHA loan. We have enough funds to put down 10% if needed. The house needs some minor repairs (possibly septic, heating). The listing agent is pushing Homepath Renovation financing. Our agent seems to have no opinion. We’re not sure what’s best. Our credit scores are very good. The Homepath rate I was quoted is at least 1 point higher than the FHA. Can you advise why the listing agent is pushing this? They haven’t accepted our offer and we think it is due to this issue. We appreciate any insight you can provide. Thanks!

By: Gary

Gary — Wed, 21 Apr 2010 23:17:23 +0000

Dear Diana,

I am so glad to hear your offer got accepted. Holding your ground was the right thing to do and it worked out. Congratulations!

By: Diana

Diana — Wed, 21 Apr 2010 22:38:09 +0000

Our offer was accepted today. Thanks for your help.

By: Diana

Diana — Mon, 19 Apr 2010 23:59:50 +0000

Thanks Gary. We decided to explain our circumstances and are now waiting for a reply. The property would be owner occupied but not considered our primary residence, but Homepath allows second homes with a higher down payment which we are offering. The First Look program excludes investors for the first 15 days to give owner occupants a chance to buy, but Fannie Mae’s literature never mentions “primary residence” (that term is only used in our counter offer). Their definition of investor does not apply to us, so we do not know if we are excluded. As you said, if it is meant to be it will happen.

By: Gary

Gary — Sat, 17 Apr 2010 09:56:55 +0000

Dear Diana,

I cannot give you advice on this, because this is not a finance issue, but a contract issue. You must discuss this with your real estate agent. Now let me try to share what I can to be helpful. I have never heard of the Fannie Mae First Look Initiative, so why the seller is countering your offer I am not sure. Now, you have the right as a buyer to make it clear to your agent that you need to go homepath and that is final. You and your husband have the right to choose your financing, this is not a seller choice, but your one, they (the seller) cannot force you to change your financing, now if they choose not to accept the offer, then shame on them. You also cannot agree to this Fannie Mae First Look because then you and your husband would be possibly be committing loan fraud for stating that you would be owner occupying the property, which cannot be backed up on your loan approval based on your husband’s telecommute issues. If I was in your situation, I would counter back that you must finance using homepath and that is final. If you do not get the home, then it was not meant to be, but at least you were being honest. If a seller is this ignorant that they know your finance options for you better than yourself and will not agree, then you need to let it go and find another property with a seller that is more willing to work with you. I see this type of behavior from seller/fannie mae all the time. You just need to hold your ground. Good Luck, I wish you the best.