Phoenix

[evilmasterfoo]

We just got Fannie Mae to accept our offer on a home in Peoria. They were asking far too much for it and we got them to come down almost $13k from the asking price. According to our Realtor and my own investigations, there's a very good chance that the appraisal will come in as much as another $17k less than the accepted contract amount.

This property sat for at least a month in an area where homes have been selling much more quickly, before we got them to accept our offer (after 4 counter offers!). As we're buying on an FHA loan, we can't finance more than the appraised value and wouldn't want to buy for more than that anyway. Does anyone have any experience with Fannie Mae accepting a much lower amount based on the appraised value? 

Thanks!

[VinnieTheFish]

FYI,

If it's a Fannie Mae owned home you should look into the HomePath program they offer.  I'm in the same boat as you in the PHX area and started looking almost exclusively at Fannie Mae owned homes since we're limiting ourselves to FHA loan limits.  With the HomePath loan you can put 3% down, no appraisal required, Fannie Mae offers $$$ towards closing costs and NO PMI INSURANCE REQUIRED.  The no PMI suddenly makes the Fannie Mae homes really atractive in our case, much more so than Freddie Mac owned homes.  It's important to note that the interest rate might be slightly higher than the record low's you see averaged, but no PMI in our case is going to be a huge savings since you have to pay PMI for the first 10 years with FHA.

http://www.homepath.com/financing/index.html

If you don't go the HomePath route there's also a FHA 203K program that allows you to rehab a home built into your loan.

http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/203k/203kabou

Just as a FYI I'm not a real estate agent or Mortgage broker & your situation may be different than mine.  Either way you should talk this over wtih both the broker and RE Agent you're working with.

Good luck and happy house hunting!

[Trooper]

".......since you have to pay PMI for the first 10 years with FHA".

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I could be wrong, but from what I've been reading on other forums, I believe it's only 5 year mandatory PMI with an FHA, or could be longer if the LTV hasn't reached 79%.  Now that may translate to 10 years with minimum payments, but if you add a little extra each month towards the principal, you could get it down to the 79% a LOT faster.  In that case, once you hit the 5 year mark, and had reached 79% LTV, the PMI would cease.  

[VinnieTheFish]

Good to know... I didn't know that.  Thanks for the clarification.