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Fannie offers closing cost help

By Polyana da Costa · Bankrate.com
Tuesday, April 12, 2011
Posted: 10 am ET

Fannie Mae is reviving incentives to lure buyers, as it tries to unload its thousands of foreclosed homes.

The agency is offering to give buyers up to 3.5 percent of the selling price to be used toward closing costs. The incentive applies to offers submitted on or after April 11 that close by June 30.

Fannie lists homes for sale at HomePath.com. Only buyers purchasing a HomePath property as their primary residence may receive the closing cost assistance.

Last year, Fannie offered similar types of incentives, including $1,500 bonuses for real estate agents who made deals happen by certain deadlines.

If you are buying a HomePath property, you may be able to qualify for a HomePath mortgage. It doesn't mean you would be borrowing directly from Fannie. The loan would be originated by an approved lender and later sold to Fannie. Not all lenders offer HomePath financing, but if you can find one that serves your area, it may be worth it. A list of participating lenders can be found at HomePath.com.

Fannie Mae loans don't require mortgage insurance or an appraisal, which means you won't have to worry about the potential of your deal failing at the last minute due to potential appraisal errors.

But do your homework to make sure the property is worth what you are paying. HomePath properties are normally priced according to recommendations made by local brokers to Fannie's asset managers. Since they know they won't have to deal with appraisals, there is a potential for properties being overpriced. That doesn't mean you have to accept their asking price. You can always make a counteroffer or pursue another property.

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