The foreclosure market is still going strong around Indianapolis and the rest of the Indiana. Of course this isn’t good news for the Indianapolis real estate market which is continuing to experience a decline in home values across the area, according to a recent report by the Indiana Association of REALTORS®.
Since there are many foreclosed homes that make up the total of Indianapolis homes for sale, companies controlled by the government, such as Fannie Mae and Freddie Mac are offering incentives to ignite the sales of these homes.
Indianapolis REALTORS® can account for the fact that their buyers are having a much tougher times nowadays in securing financing to even buy a home. While they report that they are seeing more buyers interested in making a purchase (perhaps spurred on by the $8000 First-time Home Buyer Tax Credit), they are also reporting that it is tougher to get to closing because of financing falling through.
However, one group of today’s buyers are getting a break because Fannie Mae and Freddie Mac are helping foreclosed homes by giving incentives to borrowers who want to buy one of their homes in foreclosure.
Called Freddie Mac’s Smart Buy, borrowers will need to hurry to reap the benefits of this program because it will lapse at the end of October. The program was initiated in July of this year and gives upwards of 3.5 percent of the final sales price of a home to assist with closing costs.
In order to qualify for this program, the home of interest needs to be your principal residence and must appear on Freddie Mac’s website called HomeSteps. Fannie Mae and Freddie Mac are helping foreclosed homes through this website which lists Freddie Mac’s foreclosed properties.
Also to qualify, your loan needs to close no later than the end of this year. As an added bonus, these properties include a 2-year warranty on plumbing, heating and air-conditioning systems, electrical and major appliances.
Both Fannie Mae and Freddie Mac are helping foreclosed homes but Fannie Mae’s is arguably more assertive than Freddie Mac’s efforts.
Through those lenders who choose to participate, Fannie Mae is offering loans to those buyers who can put down three percent toward their home. These borrowers also are not required to secure PMI (private mortgage insurance) as would normally be required through just about any lender.
Fannie Mae’s representatives feel that they already own the risk on the home therefore borrowers can save that few hundred dollars each month they would normally pay in insurance.
In addition, Freddie is offering to help buyers with closing costs if they are negotiated on the purchase agreement. But different than Freddie, Fannie does not cap their level of assistance. Under their program, payments have averaged approaching four percent of the home loan’s value.
To further ignite home sales, Fannie Mae was offering to assist with repairs on their homes, up to $3000, during the first six months owners were in their property. While this promotion expired in June, Fannie is debating whether or not to offer this incentive again.
In those areas most affected by the economy (qualifying according to the National Stabilization Program), Fannie has also discounted their properties as much as fifteen percent.
Both Fannie Mae and Freddie Mac’s goal appears to be revitalization of communities as emphasis is placed on owners using these properties as their main residence.
They also appear to be inspiring banks to join in on offering incentives to move these foreclosed homes. Once hesitant to offer incentives, we may see similar programs from them by the end of the year.