If you would like to buy a repossessed house in move-in condition and located in an urban area, consider looking at Home-Steps, a new service from the big secondary mortgage lender Freddie Mac.
HomeSteps currently has 18,000 to 20,000 properties located in many states, though 40 percent are in California.You can look at what HomeSteps has to offer online at www.homesteps.com, which gives you a chance to search for houses by geographic location or by housing features, such as the price range, number of bedrooms and baths and other common markers.
If you don't find a house you like, you can register with HomeSteps and the company will send you an e-mail when the type of house you desire becomes available.
For those who don't want to use the Internet, toll-free telephone help is available - 800-972-7555. The operator will send you a list of all the houses available in up to three cities.
You probably won't find any great bargains among these properties because Freddie Mac has arranged to get each house into good condition, fixing up the electricity, plumbing, walls, carpets, tiles and linoleum. Once the house is in good shape, it goes up for sale at the average market price in the neighborhood.
But you do get a couple of good advantages - a down payment of as little as 5 percent, with no nettlesome private mortgage insurance.
And because Freddie Mac - like all other lenders - is eager to get rid of these repossessed properties, you will be able to save on closing costs and won't have to pay for an appraisal.
All that said, you probably won't find the house of your dreams among repossessed properties. Some are in dangerous neighborhoods, others may not look good despite being fixed up and if you look for something with five bedrooms and three baths, you're likely to come up empty-handed.
But if you're a potential buyer who has more time than money to invest in a house hunt, these properties may lead you to the closing table.
Mortgage interest rates this week (Nov. 20) were at their lowest point in almost two years. The average for a 30-year fixed rate mortgage fell to 7.18 percent, down from 7.23 percent last week, according to Freddie Mac.
In competitive markets, you probably can find lenders advertising mortgages under 7 percent as long as you're willing to pay some points.
If you have a $140,000 mortgage balance with an 8 percent interest rate and a payment (principal and interest) of $1,027, you could save about $80 a month by refinancing now.
On the other hand, pay off that mortgage in half the time with a 15-year loan at this week's national average of 6.73 percent. The payment on a $140,000 loan would be $1,237 a month.
Adjustable rate mortgages aren't very attractive right now. The average rate this week was 5.48 percent, down from 5.53 percent last week. But the spread between the one-year ARM and the 30-year fixed rate is less than two percentage points, which means the money-saving advantage of an ARM could easily be wiped out by the second year of the loan.
A lot of homeowners are taking advantage of the low rates to reduce their own housing payments. Refinancing accounted for almost 42 percent of mortgage activity last week, according to the Mortgage Bankers Association.