6 Steps to Buying Your Home From Fannie Mae Foreclosures

A lot of people do not exactly know what Fannie Mae is. Fannie Mae, or the Federal National Mortgage Association, is founded in 1938 during the Great Depression to help low-income families purchase homes. In 1968, it was chartered by Congress as a private shareholder-owned corporation to be sponsored by the United States government. Fannie Mae’s mandate is to keep funds flowing to the mortgage market, help distressed homeowners, and encourage sustainable lending. In short, Fannie Mae exists to serve America’s families and the housing market. Fannie Mae Foreclosures, on the other hand, is a shareholder company that buys up repossessed property, then sells these homes at a cheaper price or arrange mortgages and negotiate prices for these homes in order to provide cheaper homes to people who might otherwise not be able to afford it.

Fannie Mae foreclosures are one source of cheap properties to buy fromHow does one go about buying a Fannie Mae foreclosure?

Generally, buying Fannie Mae foreclosures follow the steps outlined below:

1. Providing information to your lender

Your selected mortgage lender will require information on your income, employment, savings and how much down payment you can afford. Having all these information ready is important in qualifying for a mortgage.

2. Getting preapproved for a mortgage loan

Having a pre-approval letter will shorten the time it takes your lender to complete the mortgage application process, although it is not a mortgage commitment or guarantee. It also provides guidance for the mortgage lender how much you can afford to spend for your home loan.

3. Shopping for the best deal

Getting the best deal on loan terms, interest rate, and fees is important. Remember that you are investing not just in a home but also in the mortgage loan that will finance your home. Talking with several lenders can help you get the best deal possible.

4. Understanding and making clear on the pre-approval process

During the preapproval process, the lender you choose will review your financial information, including salary and how much you owe on credit cards, car payments, student loans, how promptly you’ve paid your bills in the past, including your ability to pay property taxes and other expenses of homeownership. Also ask additional expenses related to buying a home such as the upfront costs of originating, processing, and closing the loan, costs associated with escrows for taxes and insurance, and homeowner association dues.

5. Escrow Account

Most mortgage companies require an escrow account for mortgages with less than a 20 percent down payment or those with a lower loan-to-value ratio, unless the borrower is willing to pay a higher interest rate, so consider opening an escrow account

6. Selecting Your Home

Once your mortgage pre-approval is in place, you can begin searching for your home property online, in local newspapers or through a licensed real estate professional

When it comes to buying foreclosed homes, it does not matter whether it is Fannie Mae foreclosures or from a bank or a government foreclosure. What matters is the buyer knows the process so he or she can get a good deal and a quality residential property.

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