If you’re a first-time home buyer just entering the market, you’re in for a springtime treat: Fannie Mae will now pay your closing costs, up to 3% of the price of the home—provided you take the mortgage giant’s home-buyer counseling course first.
The new HomePath Ready Buyer program, announced on Wednesday April 15th, allows first-time buyers (defined as those who have not owned a home in the past three years) to take an online course, get certified, and become eligible for what could amount to significant savings. For instance, on a $150,000 home, Fannie Mae could contribute up to $4,500 toward your closing costs—which typically range from 2.5% to 3% of a home’s price—and even reimburse you for the $75 online course.
“This could actually get someone in the game,” said Frank Montro, a Chicago-area real estate broker who specializes in selling rehabbed homes. “This goes straight to the buyer’s needs.”
Montro says first-time home buyers are usually either “cash-poor or credit-poor. They pay their bills on time and they qualify for the mortgage, but they just don’t have the savings.”
By offering closing cost assistance on their properties, Fannie Mae is opening the gates to a pool of people who have largely been left behind in the housing market recovery. Traditionally, first-time buyers have made up about 40% of the market. Last year, they accounted for 33%, according to the National Association of Realtors®.
While this announcement marks the mortgage giant’s latest step in loosening credit availability—it also announced a new 3% down loan program in December—it does so with some strings attached. The closing cost credit applies only to properties in Fannie Mae’s own inventory.
Fannie Mae owns thousands of houses across the country, all seized in foreclosure proceedings, and now the government-backed private corporation is actively trying to unload that inventory. Searching their own site’s listings, realtor.com® found 7,075 single-family homes listed as Fannie Mae HomePath properties. (Click on the address to see details of the house pictured.)
“Depending on the details of the terms, closing costs can also help with down payment,” said Jonathan Smoke, chief economist for realtor.com®. “It reduces the amount that you have to bring to the table.”