Fannie Mae (Homepath) Foreclosures
If you will be financing a foreclosure I think the best deals out there are Fannie Mae foreclosures. You can find them at http://www.homepath.com/
Why are they such a good deal? They only require 5% down (It used to be 3% but they increased it last November). There is no mortgage insurance. The savings on mortgage insurance for a $300,000 house could be about $300 month. Also, they have special mortgage financing where you can roll up to $35,000 of a renovation loan into your mortgage. The buyer is required to pay the entire transfer tax amount which is 2% in this area (some townships are higher).
In my experience HUD homes usually need a lot of work and are better for cash buyers and conventional financing (usually 20% down). You can find more info at their website http://www.hudhomestore.com/Home/Index.aspx. These are foreclosures from the government Department of Housing and Urban Development. They have special buying programs for non profits, teachers, firefighters, law enforcement officers and emergency medical technicians. They even have homes for $1. Crazy. Check out their website.
Making an offer on a Hud home is pretty simple. It’s an online bidding system and you need a registered real estate agent to submit the bid. You will need a copy of a photo ID, copy of a social security card and proof of funds if paying by cash or a preapproval if you are getting a loan. If your bid is accepted then we have 2 days to submit all of the paperwork and the earnest money deposit. The buyer is required to pay the entire transfer tax amount. In most real estate transactions in this area it is split between the buyer and seller. Also, seller assist with closing costs are limited to 3% of purchase price.
Freddie Mac (Homesteps)
Freddie Mac foreclosures are typically taken care of compared to all the other bank owned properties. They have a commitment to securing the home (squatters can be a problem), removing trash and debris and keeping the property clean. You can find more information at http://www.homesteps.com/.
They only offer special financing and deals in certain states. Unfortunately, Pennsylvania is not one of them.
I have seen many foreclosures by private banks. They typically put a little more effort into fixing up the homes and remediating mold or moisture issues.
I have been the agent on an auction bid for a HUD home. When the foreclosure doesn’t sell through the MLS many times the bank or the government agency will put them on an auction site where you can bid on them. However, many of the auction properties are non financeable and you need to buy them with cash.
Here are some sites I have seen:
Foreclosures are great deals but not many hit the market in top rated school districts in this area. So if you are interested it is very important to either have proof of funds ready or to have your financing lined up with a preapproval so you can move quickly on submitting a bid.
If you are interested in foreclosures contact me and I can set you up on an automatic search so you get an email as soon as they hit the market.