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  • Fannie Mae and Freddie Mac are offering financing incentives for buyers of foreclosed homes that Fannie and Freddie own.

    623px-20090118_We_Are_One The economy is starting to turn around a little bit, and much of the credit for that can be given to the housing market. The government has stepped in to an extent to provide help for people and their failing mortgages, and this has created a much more stable real estate market at current standing. These days, the government is looking to do more to help stimulate the housing market and provide incentives for people who want to purchase foreclosed homes. It was announced this week that Fannie Mae and Freddie Mac were providing these benefits to buyers who wanted to close on foreclosed homes that were owned by the two agencies.

    The biggest issue for home buyers in today’s market is that the costs of buying a home are usually much more than advertised. Between all of the mortgage brokers, the actual cost of the home, and everything that goes along with financing a new home, things can really add up if you aren’t careful. These are things that prospective home buyers have to budget for and in some cases it can lead to them not being able to afford a certain home. What Freddie Mac and Fannie Mae are interested in doing is cutting down the price of one of the most expensive "little" fees associated with home buying.

    The concentration is on cutting down closing costs. These are the sometimes substantial costs associated with closing on a home, and it comes after all of the other financing and fees have been processed. Freddie Mac is currently running what is known as the "SmartBuy" program, and it’s designed to directly pass along some savings to people who will buy foreclosed homes from the two government-controlled companies. This has been very necessary, seeing as Freddie Mac and Fannie Mae have had to foreclose on thousands of homes over the last few years. Getting these homes back on the market and sold to good buyers has been a challenge, and this is intended to help that process along.

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    The Freddie Mac SmartBuy program is pretty simple, and it’s certainly worth it for buyers who are interested in foreclosed property. It provides an offer of as much as 3.5% of a foreclosed home’s eventual selling price as a bonus back to sellers in order to cover their closing costs. The actual amount that buyers will receive back depends upon the home they are buying and how much their closing costs end up being, but the fact remains that this can be a substantial boost to people who might be cutting it a little bit close with their new mortgage.

    This program has been running since June, and there is not a whole lot of time left for buyers to take advantage of the government help. Buyers who are interested in taking advantage of this offer have to apply through the HomeSteps program and they have to do so by October 30th in order to qualify. These are specially chosen homes by the lender and they provide two year warranties on a host of things.

    One of the challenges facing potential buyers right now is that there are very few homes available in prime areas that apply for this offer. Freddie Mac is known for not accepting high mortgages – those above $400,000 – so it follows that places like New York City would not feature many of these homes. As it looks right now, this is a good fit for those people who are looking for homes in more rural areas. With the amount of money that they can save on their closing costs, it might be well worth it to consider a home in a less than prime territory.

    Fannie Mae has their own variation of the program, and their homes have to be selected through the HomePath program. While the Freddie Mac version of helping buyers is quite ambitious in its own right, many are saying that Fannie Mae’s program might be an even better one. They are current providing loans on these homes for any buyer who can make a qualifying 3% down payment. In addition, they are not requiring these people to get private mortgage insurance (P.M.I.), which can be a significant cost. Likewise, they will provide some help to buyers with their closing costs.

    Fannie Mae’s assistance to potential home buyers also includes a program that offers up to a 15% discount on foreclosed homes for those who live in areas that have been hammered by the economic downturn. They have also been working with companies that focus their efforts of rehabilitating foreclosed properties in order to provide more families with excellent housing options.

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