From smartmoney.com
To pare down their growing inventory of properties, Fannie Mae & Freddie Mac are scrambling to unload nearly 150,000 foreclosed homes. That means 2004-esque deals – like requiring as little as 3% down, offering to pay a portion of the closing costs and arranging special financing and home warranties for repairs & renovations.
Here are the three best features of Fannie & Freddie foreclosures that make digging for these deals worthwhile.
Small Down Pymt For its foreclosed properties, Fannie will accept down payments as low as 3% on 30-year mortgages at the same interest rates banks are currently offering. And Fannie doesn’t require private mortgage insurance. Compared to a typical bank mortgage, which requires 10% down, plus PMI for buyers with less than 20%, that’s a huge savings – an estimated $51,000 up front and upwards of $2,500 per year PMI on a $300,000 mortgage.
Help With Renovations Fannie and Freddie have always fixed big flaws like leaky roofs & damaged electrical work and they often handle small projects like replacing broken or missing appliances, tearing up old carpet or fixing intentional damage left by former owners or vandals. To entice buyers who want to update or upgrade, many of Fannie's properties now come with an optional mortgage that includes extra financing up to $30,000 for repairs & improvements.
First Dibs Buyers who plan to live in their Freddie-purchased home will get to see properties for at least the first 15 days on market - before the listing opens to would-be landlords. Many bank-owned foreclosure properties are snatched up by cash-stocked investors who can wait out the downturn to sell later at a profit.
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