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Freddie Mac Foreclosures

Freddie Mac foreclosures are becoming a popular choice amongst first time buyers and real estate investors. These properties are listed for sale through HomeSteps; a home purchase program that offers discount properties and special incentives.

Freddie Mac foreclosures are nearly identical to Fannie Mae properties sold through Home Path Mortgage. Both programs offer a first look initiative that gives individual buyers first right to buy during the initial 15 days of listing. Afterwards, real estate investors are allowed to submit purchase offers.

It's advantageous for buyers that require financing to act quickly when foreclosure properties are listed. The majority of investors supply cash offers which are favored by banks. Competing with investors that buy houses with cash rarely results in a win.

Both Fannie Mae and Freddie Mac require buyers to become pre-qualified for financing before placing offers on houses. Buyers who are uncertain if they will qualify for a bank loan should talk with HUD-approved housing counselors.

The next step involves talking to a loan officer to evaluate income, expenses, and credit-worthiness. In order to qualify for a low-interest mortgage loan buyers' will need a stable income, good credit, documentation of income, down payment, and an independent property appraisal.

Buyers typically need a down payment of 5 to 20 percent of the purchase price. Additionally, buyers need to setup an escrow account to prepay for services that will be due at closing. Settlement charges include real estate appraisal fees, title fees and insurance, homeowners insurance, and property transfer recording charges.

Mortgage lenders provide a Good Faith Estimate to advise buyers of anticipated costs. Keep in mind it is called an estimate for a reason. Costs might increase or decrease, so be prepared for additional expenses when settling the transaction.

Buying foreclosures from Freddie Mac isn't much different than buying real estate listed by private sellers. Properties are listed through approved real estate agents. Buyers can hire independent home inspectors and appraisers and acquire financing through the lender of their choice.

A few tricks that can improve chances of a successful offer include:

1. Submit your best offer upfront. While this might sound illogical to most, Freddie Mac foreclosures are already priced below market value. The bank incurs a financial loss and they aren't going to budge on the price. It's helpful to include "Highest and Best" at the top of the written offer. Freddie Mac will know upfront this is the most that will be offered and they can either accept or reject.

2. If you need bank financing be certain to include a pre-approval letter with the purchase offer. Also include that you will submit the mortgage loan application within 7 business days of Freddie Mac accepting the offer.

3. Make certain offers do not expire in less than 14 days. Freddie Mac could easily receive dozens of purchase offers on the same property. If yours gets buried in the stack and expires before they see it, the offer will be tossed due to the expiration date.

4. Advise of your buyer status. Freddie Mac wants to know if you are a first time home buyer or real estate investor. They also want to know if you'll be the owner-occupant or plan to use the house as investment property.

It's helpful to work with real estate agents experienced in Freddie Mac foreclosure sales. It's also a good idea to spend time becoming educated about the home buying process at

We invite you to learn more about the pros and cons of buying bank owned homes at our real estate blog. Here you'll discover government sponsored home buying programs, such as Home Path Mortgage and foreclosure prevention programs such as Making Home Affordable. Our goal is to help people overcome challenges associated with homeownership.