The Cortes' were ready to buy their first home. We had discussed the financing, they knew what they could afford, how much they were willing to put down and what they wanted in a home. After the first weekend with their realtor the Cortes' looked at a lot of homes. Most of them were bank owned foreclosures and they saw a number of homes that were in really bad condition. Most of them had been stripped of the appliances, the cabinets, sometimes even the copper plumbing. The people who lost the home to the bank didn't want to leave anything of value so they didn't. Besides the fact that the Cortes' didn't really want to buy a property that needed extensive repairs, they couldn't in most cases anyway because they were utilizing an FHA loan program that has significant restrictions on property condition. While sifting through the available homes in their desired area they did manage to find a couple of homes they liked and at the Realtor's suggestion they made offers on both homes. Both were bank owned properties and in both cases they were 'outbid' by other buyers. In all actuality they were not outbid. Both of the homes they wanted to buy got lower offers from investors who were able to pay cash rather than having to take out a mortgage. Even though the cash buyers were offering less than the Cortes', they were still being chosen because the banks didn't want to risk the Cortes' not being able to secure the mortgage that they had already qualified for. Eventually after 11 offers they had one accepted and were able to close but the process was much more difficult than anticipated.
So how can you avoid going through what the Cortes' had to deal with? Fannie Mae's HomePath Program is able to help get around a number of the issues that the Cortes' had to deal with. Here are some of the highlights of the program:
- Only 3% down payment required
- No mortgage insurance
- No appraisal required / No property condition restrictions (fixers are OK)
- Some listings are eligible for the HomePath Renovation program which allows you to finance additional funds to be used for upgrades and repairs to the property.
- The program has a feature called First Look which is a 15 day time frame from the original listing date that is reserved for people who are going to occupy the home rather than investors that just want to fix the house and re-sell it. (The Cortes' really could have used this).