"Buyers of Fannie Mae properties can use any financing, and often have already been preapproved by another lender," Stanley says. "But the best way to finance a Fannie Mae REO is with HomePath financing."
Foreclosure buyers should make sure they are completely preapproved for a loan and have submitted all the necessary paperwork before making an offer, Stanley says.
She urges shoppers to look into HomePath financing as part of the loan preapproval process so "they are in a position to make an immediate offer if they find a Fannie Mae foreclosure."
Fannie Mae spokeswoman Amy Bonitatibus says that since Fannie Mae appraises each foreclosed property to determine the value, borrowers financing with HomePath Mortgage will not have to pay for an appraisal. They also will not have to pay for mortgage insurance. In addition, the down payment requirement is only 3 percent.
Help with closing costsBonitatibus says that Fannie Mae typically pays between 3 percent and 6 percent of a buyer's closing costs, regardless of how the property is financed. Buyers may choose any title company.
The HomePath Renovation Mortgage allows buyers to borrow an additional 20 percent of the "as repaired" property value, up to $30,000. The "as repaired" value is the appraised value based on the completion of specified renovations, such as new appliances, cabinets or flooring.
Buyers interested in purchasing a Fannie Mae foreclosure should be sure their mortgage consultant knows about the HomePath program, says Tanya Marchiol, founder and president of TEAM Investments in Phoenix.
"Buyers with good credit and debt-to-income ratios, might prefer conventional financing or an FHA loan," Marchiol says. "But it's important that the lender has the knowledge of all these programs to see which one is a good fit."
Buyers interested in obtaining funding from their state or local government or charities should apply directly to their local offices to see if they qualify for assistance.
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