Home Loans California & Arizona

Goodyear AZ HomeReady loan program, What is it and who does them

September 4th, 2019 11:34 AM by Nathan Rufty

HomeReady™ in Goodyear Arizona is a Fannie Mae loan program that is designed to extend the privileges of home ownership to buyers with limited household incomes. You may be able to buy a home with little or no money out of your pocket by using gift funds provided by your family members.


The Fannie Mae HomeReady Mortgage Program enables borrowers with limited financial resources and non-traditional sources of income to buy a home with a low down payment.  The program was created to address the increase in the number of households with extended-family living arrangements such as cases where home buyers live with relatives.

The HomeReady program is offered by Fannie Mae through participating lenders.  In short, Fannie Mae is a government-sponsored enterprise that develops mortgage programs and provides capital to lenders.  From the borrower’s standpoint, the involvement of Fannie Mae is less important because you interact with the lender, not Fannie Mae, when you apply for a HomeReady mortgage.

Key benefits of the program include a low down payment requirement and the ability to use alternate income sources to qualify for the mortgage or afford a larger loan.  Potential drawbacks include a higher interest rate as well as borrower income and loan limits.

Also unlike government-backed low or no down payment mortgage programs such as the FHA, VA and USDA programs, the HomeReady program does not require borrowers to pay an up-front mortgage insurance fee.  Eliminating the up-front mortgage insurance fee potentially removes thousands of dollars in closing costs, making it more affordable to buy a home.  In addition to not requiring an upfront mortgage insurance fee, the ongoing monthly private mortgage insurance (PMI) cost for a HomeReady mortgage may be lower than the monthly PMI fee for a standard mortgage or the mortgage insurance premium (MIP) for an FHA loan, depending on your credit score and loan-to-value (LTV) ratio.  Additionally, PMI is removed when your LTV ratio falls below 78% whereas borrowers are required to pay FHA MIP over the entirety of their mortgage.

homeready goodyear az

Goodyear Az Borrowers should understand both the positives and negatives of a HomeReady mortgage to determine if it is the right program for them.  We review the full list of the pros and cons for the HomeReady Mortgage Program below.

HomeReady loan program in Goodyear AZ financing up to 97% loan-to-value (LTV) for purchase of one-unit principal residence in Goodyear AZ (Desktop Underwriter® (DU®) is required for LTV ratios >95%); up to 95% LTV for limited cash-out refi (LCOR) and up to 97% LTV for LCOR transactions in DU when the mortgage being refinanced is owned or guaranteed by Fannie Mae:

  • Borrower is not required to be a first-time buyer
  • Cancellable mortgage insurance (restrictions apply); lower MI coverage (25% for LTVs >90% to 97%) compared with standard requirements 
  • Gifts, grants, Community Seconds®, and cash-on-hand permitted as a source of funds for down payment and closing costs 
  • Supports HomeStyle® Energy, manufactured housing, and HomeStyle® Renovation
  • Innovative underwriting flexibilities expand access to credit responsibly. Flexibilities include rental unit and boarder income, as well as non-occupant borrowers, such as parents.

Goodyear AZ HomeReady Borrowers Benefits:

  • Low down payment: As low as 3% down payment for home purchase and refinance transactions.
  • Flexible sources of funds: Can be used for the down payment and closing costs with no minimum contribution required from the borrower’s own funds (1-unit).
  • Affordable and cancellable monthly MI: Reduced MI coverage requirement above 90% LTV; cancellable MI per Servicing Guide policy.
  • Homeownership education: The online Framework® course prepares borrowers for sustainable homeownership; other education and housing counseling options are available.

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