Expert: Connie Wildasinn-Broker,GRI,Realtor® - 4/21/2010

Question
Hi Connie,
I made an offer on a condo in Chula Vista City (California) that according to zillow is worth 80k however the seller wants me to instead get a loan w/homepath which I will have to buy the condo at 93k w/an interest rate of 6% which I found odd because my credit score is around the 780. Also I will pay around $2,500 for closing cost and the seller will pay for the remaining balance. The condo needs some work not major. Im really confused my agent says its a good deal cause I will be getting 8k back for the first time home credit and I don't have to come up with a lot money down. My payment will be aroudn $940 which I think is a lot for the purchase amount. Please help me, is homepath a good deal?

Answer
Hi Lorena,

Congratulations of deciding to make the jump and buy a property... great time with low rates and prices depressed as they are from the high point.

Pricing your purchase off Zillow is chancy at best... I have never known them to be accurate in their pricing module.  You should have an appraisal done, or ask your realtor to run 'Comps" and see what has sold recently, also get a tracking of the market, see it is trending up or down still... even if trending down, this is still a good time to buy with the credits and low interest rates...

Now on to Homepath, the program as I understand it is that it is set up to sell properties that Fannie Mae has repossessed.  If they do the loan, there is no appraisal, reduced closing fees and those type of incentives to use their lender.  With your score you should qualify (if the rest of your credit app ie: the income qualifying and money down)with what should be considered the best rate.  You may want to find an independent Mortgage Broker (check around they are not created equal) to run you numbers and see (with all things considered-closing costs and rates to interest) who has the better terms for you and your situation.  FYI the $2,500 in closing is extremely low... get a good faith estimated HUD from the lender... make sure EVERYTHING is on it.. because although they must be within 10% on certain items, I am seeing them reissue HUDS with 1 or weeks to close and buyers are getting hit with increased cost, and naturally once emotionally vested in a property, many buyers have a hard time pulling out ... these items should be accurate upfront or atleast within a couple hundred dollars...

Lastly on the $8,000... it is a credit worth only a few hundred depending on your income... if this is the make it or break it to your decision to buy... you are buying way way way above your means... this a Band-Aid... don't make this the deciding factor to a purchase... make sure you are getting a fair deal (you won't get a steal without cash and good connections) but a good fair deal is worth it later down the road...

Good Luck!