The Pros and Cons of a HomePath Mortgage: Is it worth it?

The Federal National Mortgage Association (FNMA), an entity more commonly known as Fannie Mae, has adopted the brand, HomePath, as the name used on all Fannie Mae-owned properties.  Consumers now have the option to apply for a HomePath Mortgage, which is a specialty mortgage product available for all properties owned by Fannie Mae.  As with any mortgage product, there are pros and cons to this type of mortgage.

Pros

1. Financing is a more relaxed process with a HomePath Mortgage.
2. You won’t need an appraisal, which means there won’t be regulation repairs required and empty pools are acceptable.
3. If you’re looking to buy a condo, you won’t need to be worried about 50% owner occupancy or 15% greater HOA dues being delinquent.
4. You don’t have to get Private Mortgage Insurance (PMI), regardless if you put less than 20% down.
5. Fannie Mae will give you 3.5% down to help cover buyer’s costs.

Cons

1. You’ll likely end up with higher interest rates than if you’d applied for a conventional or FHA loan.
2. You’ll pay quite a lot of the closing costs if you can only put 3% down, but this is lowered if you can manage to put 5% down or if your FICO score is high.
3. The final problem, and this is a BIG one, is that you will receive the home “as is.”  Since there was no inspection, the code issues and safety issues of your wiring, plumbing, etc. cannot be determined.  You’re welcome to bring in your own property inspector—in fact, we highly suggest that you do so—but don’t expect to get the price lowered to cover needed repairs. Fannie Mae makes no guarantees on the property or appliances, and any major repair issues are left as your responsibility if you decide to purchase the property.