You may have heard reports about foreclosure inventories shrinking over the past few months. If you were thinking of buying a foreclosure as a fixer-upper to call home, you’re not out of luck yet. The private sector supply of foreclosures is getting smaller, but the government supply of foreclosures is still abundant, as explained in the recent Equifax Finance Blog article, “Looking for a Foreclosure to Buy? Try Uncle Sam.”
Federal Housing Administration (FHA) foreclosures may be the best bargains. These homes were once owned by FHA borrowers who defaulted on their mortgages. These homes are typically first-time buyer or starter homes and usually need repairs. The Department of Housing and Urban Development (HUD) sells FHA foreclosures in a bidding process that favors owner-occupants over investors. For the first 30 days, only owner-occupants are allowed to bid on these homes. View these home sale listings at hudhomestore.com and choose an agent who is registered to bid with HUD. If you find an FHA foreclosure that requires repairs, the FHA offers special rehabilitation loans to help finance the home repairs.
Fannie Mae foreclosures are sold through the HomePath program. These homes are typically more expensive than FHA foreclosures and you do not need to use a Fannie Mae registered or approved agent; any licensed real estate agent can help you with these homes. Owner-occupants are given 15 days from the date of listing to make an offer (except in Nevada, where owner-occupants get 30 days). An owner-occupant is one who will occupy the property as their primary residence within 60 days of closing and maintain occupancy for one year. Eligible buyers may take advantage of the Fannie Mae HomePath Mortgage, which has a low down payment, no lender-requested appraisal, and no mortgage insurance. Fannie Mae also offers a special mortgage program to assist with moderate renovations and repairs, the HomePath Renovation Mortgage.
Freddie Mac foreclosures sells homes through the HomeSteps program and offers many of the same incentives as Fannie Mae, including the 15-day owner-occupant/community stabilization nonprofit opportunity to bid without investor competition. Freddie Mac offers special financing with low down payments as well, but it is not available nationwide. Freddie Mac also offers closing cost assistance to buyers who complete homebuying, credit and personal finance workshops.
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