Last week, Fannie Mae announced some new incentives for home buyers. Qualified buyers who purchase one of their distressed homes (i.e., foreclosures) could receive up to 3.5 percent of the final sales price to put toward closing costs. Example: If I purchased a Fannie Mae foreclosure home for $250,000, I would be eligible for up to $8,750 worth of closing cost assistance.
On average, closing costs add up to 3% – 5% of the loan amount. So this new incentive could cover all or most of the home buyer’s closing costs. That’s nothing to sneeze at.
In order to qualify for this incentive, you must purchase a home that’s listed on HomePath.com. This is Fannie Mae’s website for distressed / foreclosed properties. You must also be an “owner occupant,” which means you are buying the home to live in it. Real estate investors need not apply.
To be eligible, purchase offers must be submitted on or after September 23, 2010, and must close by December 31, 2010. Additionally, the sale must close within 60 days of the offer acceptance.
The incentive program is Fannie Mae’s latest effort to get a growing number of foreclosure homes off its books.
Additional Incentives Through HomePath.com
In addition to the closing costs contribution, home buyers can qualify for attractive financing terms when buying a home through HomePath.com. Many of the foreclosed homes listed on the website are eligible for HomePath Mortgage Financing. The perks of this program include smaller down payments and easier qualification, when compared to a traditional mortgage loan.
Qualified borrowers can put as little as 3% down when buying a foreclosed home through HomePath.com, and they may see their mortgage insurance and appraisal fees waved, as well.
How to Buy a Fannie Mae Foreclosure Home
So how do you go about buying a foreclosed home through the Fannie Mae website? Fannie Mae works with local real estate agents to list their REO properties. So if you find a home you like on the HomePath.com website, you should make note of the agent’s name and contact info. You can then ask the agent to show you the property.
The HomePath website also provides a state-by-state list of mortgage lenders that participate in their financing program.
When you’re ready to make an offer on a home, you will need to include the following items (at a minimum):
- A standard real estate contract for the state where you are buying.
- A Fannie Mae real estate purchase addendum.
- Earnest money. This will be deposited with the title or escrow company, and applied toward the down payment and closing costs at the closing.
- Proof of funds (if you’re paying cash for the home), or a copy of your pre-approval letter (if you’re getting a mortgage loan).
This is a simplified version of the process. If you want to learn more about buying Fannie Mae foreclosures, refer to the HomePath.com website. They have a variety of resources for home buyers. You might also want to speak to a HUD-approved housing counselor, or a real estate agent who is familiar with this process.