Just like banks that foreclose on a property, Fannie Mae and Freddie Mac foreclose on properties where the mortgage isn't paid, and then they sell them. Programs for each government agency help buyers through the process, and offer great deals! HomeSteps for Freddie Mac gives great terms for loans including a 2 year home warranty, 3.5% of purchase price to go toward buyers' closing costs, and an appliance discount. HomePath for Fannie Mae gives even better terms! Buyers only need a 3% down payment, which can come from gift money from family and friends, there is no mortgage insurance, which lowers monthly payments, and they don't charge appraisal fees, which start at about $400. Both programs have great websites: www.homesteps.com and http://www.homepath.com/. Many lenders also work with them, check and see if your lender is qualified!
If you think the price is fair enough, you may pay it in full price and negotiate for a lower interest or ask for a smaller down payment. Try to maximize the opportunity so that you would have a great deal of your money.
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