FHA – Alternative Mortgage Options

Borrowers looking for an alternative to the FHA loan program can now consider a new loan option from FannieMae and FreddieMac.
FreddieMac offers the Home Possible Advantage loan program
FannieMae offers the Home Ready loan program

Details on these programs are below:

Overview:

Both Home Ready (FannieMae) and Home Possible Advantage (FreddieMac) are loan programs for borrowers that want an alternative to FHA with little money down. 

• Less down payment (3%) 
• Assistance with closing costs by utilizing a seller concession up to 3%. (Note: If a borrower puts at least 10% down, a 6% seller concession is allowed.) 
• The Home Ready program has a less stringent appraisal than an FHA.
• This program has income limits.
• First time homebuyers will be required to complete an informational course online.

Important observations:

1. Look for anything that can be considered unsafe. 
2. Make sure all utilities are functioning. Plumbing, heating, hot water, sinks, toilets.
3. Make sure the house has a stove. A refrigerator is not necessary at the time of inspection  
4. If the house is winterized, it must be de-winterized before the appraiser inspects it. The utilities must be turned on and tested to confirm habitability.
5. Is there mold in the basement? 

Important Conversations:

1. If you observe what appears to be a new deck, ask if it has a “certificate of occupancy”. It will be a problem and could postpone a closing a month.
2. If you observe what appears to be a finished basement, ask if it has a “certificate of occupancy”. It will be a problem and could postpone the closing a month or more.
3. If a property has a “shared well”, ask if there is a maintenance agreement and obtain it
4. If a property is on a private road, ask if there is a maintenance agreement and obtain it 

Other notes:

1. Verify the property and school taxes. If inaccurate taxes are submitted, it will cause the “debt to income ratio” to be wrong and could cause a declination of the loan. The ratio could exceed the maximum limit.
2. A client must be at least 4 years from a bankruptcy to be eligible 
3. A client must be at least 4 years from a foreclosure or deed in lieu of foreclosure.

For additional specific information about this program
contact a Windsor Realty Professional