Freddie Mac offers owner occupied borrowers and certain non-profit agencies to have first dibs on Freddie Mac owned homes. It’s made possible through the Freddie Mac First Look Initiative. You’ll recognize the homes as they are advertised and sold HomeSteps.
What is the Freddie Mac First Look Initiative?
First, let’s look at the idea behind the Freddie Mac First Look Initiative.
Freddie Mac created the program to enforce some stabilization in specific communities. Right now, the program is available in 10 states. These are homes that Freddie Mac financed, but the owners defaulted. Freddie Mac now owns the properties. They try to sell them to owner occupied borrowers first before marketing the property to investors.
How it Works
The first 20-days of a home’s listing is reserved for owner occupied borrowers or those with a non-profit agency. The agency must be affiliated with a program that promotes community stabilization. Investors can’t bid on the property directly to Freddie Mac during the first 20 days.
You do not need to be a first-time homebuyer. However, you must be able to prove you are buying the home to live in as your own. It can’t be a second home or an investment home. You may see the listing in the MLS, like any other property. Freddie Mac also advertises it on their website. You can search for eligible homes by specific address or search broader with any of the following:
- Zip code
You’ll see which properties are still in the ‘first look’ phase, where only those planning to live in the property can bid. You’ll also see the properties that are no longer in the ‘first look’ phase and are eligible for bids from anyone.
If you successfully bid on a home within the first 20 days, you must complete an Agreement of Purchaser for Neighborhood Stabilization Non-Profit, NSP, NCST or Government Agency. Fraudulently signing this agreement could result in criminal charges.
Using HomeStep Financing
If you bid on a HomeStep home, you may qualify for HomeStep financing. Participating lenders offer this flexible financing option. They offer the following benefits:
- No need for an appraisal
- Low 5% down payment
- No mortgage insurance
Not every home is eligible for HomeSteps financing. Your listing agent can inform you if the Freddie Mac First Home Initiative Home is eligible or not.
Making an Offer
In order to make an offer on a Freddie Mac First Home Initiative Home you need to work with an approved real estate agent. You can find approved agents directly on the HomeSteps site. You should take your time choosing an agent, though. You’ll want someone experienced with the process so you are able to successfully buy the home you want. The real estate agent plays a vital role in the process of you getting the home.
As with any loan, you should apply for loan preapproval first. Whether you use the HomeStep financing or other options, knowing what you can afford will help you bid the right price on a home.
When you have the preapproval handy, you can get through the process faster. You only have 20 days to complete the process. If more than 20 days pass, bidding on the home opens up to anyone, not just owner occupied borrowers.
If you are looking for a home to use as your primary residence, take advantage of the Freddie Mac First Look Initiative. You don’t have to use the HomeStep financing. You can use your own lender and type of financing, if you wish. It just gives you the first advantage at securing a low purchase price on a foreclosed home.