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A Homebuyer’s Guide – Beating Investors on Great Opportunities

Home prices & interest rates continue to be extremely affordable, allowing homebuyers a unique opportunity to capture substantial value on real estate transactions. That said, there are two general types of homebuyers: families and individuals who buy a home to live in it, and investors who purchase real estate to make money. And since many investors have plenty of cash, it allows them a powerful advantage over aspiring homeowners who often face tighter credit & financing conditions.

Fortunately, an educated homebuyer can effectively compete against investors by utilizing very affordable government financing programs. In this article, you’ll learn about the features & benefits of two government programs in particular: HomePath Loans from Fannie Mae, and Federal Housing Administration (FHA) Home Loans. Here’s the most important thing to know about HomePath and FHA loans: they both give traditional homebuyers an exclusive time period to make an offer on a property before investors can start bidding.

HomePath loans can be used for Fannie Mae-owned homes. The down payment requirement is 3%, and no mortgage insurance or appraisal is needed. Also, there are no income limits, and you can get a portion of your closing costs paid by the seller or through a special deal. In addition, you can get instant automated pre-approval upon receipt of your application. Best of all, homebuyers looking to live in the property as a primary residence have an exclusive 15 day period where they can make an offer before investors can bid. HomePath generally requires a higher credit score.

FHA loans can be used for homes owned by the Department of Housing & Urban Development (HUD). Down payment is 3.5% (assistance is available), and no appraisal is needed. Income requirements are low, and credit score requirements are lower than conventional loans. Instant automated pre-approval is available upon receipt of application, and the seller can contribute toward closing costs. You can finance home repairs into the loan, and a co-signer is allowed. In addition, homeowners looking to use the property as a primary residence have an exclusive period of 30 days from the ‘Bid Open Date’ to make an offer before investors can bid.

So which program should you choose? HomePath may be a better option if you have better credit, while an FHA loan may be better if your credit isn’t as strong. Keep in mind that the exclusive bidding period is typically 15 days for HomePath/Fannie Mae properties versus 30 days for FHA/HUD properties. That said, credit requirements & bidding periods are only two factors in the equation. Be sure to review the different features for each program, compare them, and decide which one best fits your individual needs.

To browse listings for HUD-owned homes, visit hudhomestore.com. To browse Fannie Mae-owned homes, visit homepath.com. Good luck shopping for a new home, and if you have any questions or need advice, please give me a call. I’ve helped many homebuyers find flexible & affordable financing solutions over the years, and it would be a pleasure to guide you through the process.

Sincerely,

Christopher Long

916-985-1818

clong@gbmc.com