Wednesday, May 11, 2011

Foreclosure - Why would you consider one?

Fraught with problems, lengthy negotiations which can reach months into the future and minimal property condition information (forget about any guarantee) can make one think twice about a foreclosure purchase.  You never get to deal with a "real" person.  It's all business and sometimes it's all about how to mess with you - or so it seems.  So, with all the problems, why consider one?

Home Path is the official Fannie Mae REO (Real Estate Owned) website.  If you're seriously interested in looking into purchasing a foreclosed property, start there.  You can search the listings for homes in your preferred areas and price ranges.  You can review the process of making offers.  Podcasts will explain everything to you.  The time you spend here will be invaluable. Buying a foreclosed property is not like buying a home from a traditional seller and you need to be well informed.  You need to be well informed. (That's not a typo -just good advice).

I won't spend a great deal of time other than to introduce you to the site.  There are, of  course, a couple of things worth noting.

Special Financing:

The HomePath Renovation Package:
Some of the property condition problems can be alleviated right here.  If the property qualifies, and you use the special financing package, you can wrap many of the renovation costs right into the first mortgage at the time of closing.  Of course, there are conditions; Qualified Lenders, appraisal valuations for the home after being remodeled and specific time-frames in which to finish remodeling are just a few.  Check out this program on the HomePath website if you're interested.

Soon to Expire!
You probably can recall the recently expired stimulus program offering an $8,000.00 tax credit to first-time home buyers.  It was followed by an extension and upgraded to include all buyers (conditionally) with a tax credit of up to $6,500.00.  People took advantage of this and sales, along with property values in some areas, actually increased. 

There is another program that will be expiring soon - very soon.  Fannie Mae is offering to pay up to 3.5% of your closing costs when using a typical HomePath mortgage on a Fannie Mae owned property.  This feature can save you thousands of dollars.  For instance, if you purchase a property for a sales price of $150,000, you could receive nearly $4,500 toward closing costs.  This is money that comes out of your pocket at closing - except that it doesn't!  Until June 30, 2011, Fannie Mae will pay it FOR you! But, be quick.  As mentioned, the property MUST close no later than June 30.  The HomePath website says "NO exceptions".  I think they're serious.

Typical HomePath Financing
Even if you miss the closing costs incentive, it's still worth considering one of these financing alternatives. Currently some of the Fannie Mae properties do not require an appraisal for a savings of up to $400.  Some do not require private mortgage insurance (that could save thousands over the life of the loan).  Expanded seller contribution allowances and low down payment loans make things much easier for buyers.  They even allow for less than perfect credit.  Here's the link to the HomePath Buyer Guide.

Lots of information, right?  Here's a thought:  In addition to making sure you're well informed, don't take chances.  When you're thinking "I might be interested in looking at foreclosed properties", we hope you'll immediately consider letting Responsible Referrals find an agent who is well educated and experienced in providing the special guidance required to successfully navigate this process.  Contact us and we'll find one right away!

NEXT POST:  This problem is huge. It overwhelms me...

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