Programs that facilitate home buying

Sometimes here in Phoenix and other parts of the nation you will come across a home for sale where you will be encouraged to use “Homepath” or “Homesteps.” Let’s look at “Homepath” first. This is a program for homes owned by Fannie Mae. Naturally, they need to turn around their inventory, so they’re trying to make the home buying process as seamless as possible. An appraisal is not required since they supposedly priced the home on the market, although that doesn’t mean you have to offer full price – negotiate. A 3% down payment is common, although the seller can contribute up to 6% of the purchase price toward closing costs. Additionally, investors can purchase 1 or 2 unit buildings with only a 10% down payment.

“Homesteps” is a similar program offered by Freddie Mac for REOs. They are trying to combat the notion that foreclosed homes are dilapidated (they often suffer damage at the hands of spiteful homeowners) and will lightly rehab a property to improve its chances of selling. Typically, that would include fresh paint, carpet, and in some cases, new appliances.

Finally, you may come across a program, from non-government lenders, called “Express Path.” Supposedly, they are pre-inspected, pre-appraised, low-closing, ready-to-buy homes. Of course, all those services are paid in the asking price, there is no free lunch. This allows for a quick close, but for whose benefit? Some processes do not need, and should not, be rushed. Industry support for this program appears to be mixed. Remember, a one-stop shop rarely benefits the buyer, since the savings are not transferred, but retained as earnings.

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