Time is rapidly running out on one of the best deals going for homebuyers. No, not the $8,000 first-time homebuyer tax credit - although that's due to expire Nov. 30. A more urgent deadline is the closing cost assistance offered under Freddie Mac's HomeSteps SmartBuy program, which expires at the end of this month.

The SmartBuy program provides up to 3.5 percent of the purchase price towards a buyer's closing costs when buying a Freddie Mac-held repossessed property under the agency's HomeSteps program. In addition, any homes purchased under HomeSteps come with a two-year warranty, an aspect of the program that will continue past the Oct. 30 expiration of the closing cost assistance element of the program.

Chris Bowden, vice president of Freddie Mac's HomeSteps arm, said the closing cost assistance program could potentially save home buyers "thousands of dollars." HomeSteps is the branch of Freddie Mac that handles sales of foreclosed homes that revert to the government-supported secondary lender.

Two-year warranty on major systems, appliances

The two-year warranty covers major systems such as electrical, plumbing, heating, cooling and ductwork, as well as major such as washers and dryers, water heaters, stoves, dishwashers and refrigerators. Given that potential repairs and breakdowns are a significant concern when buying a foreclosed home, the warranty helps take some of the worry out of buying a foreclosed home.

To qualify for closing cost assistance, an initial purchase offer must be submitted on the property by Oct. 30, 2009 and the sale must be closed by Dec. 31, 2009. The closing cost assistance and warranty are only available on home purchased for use as the buyer's primary residence.

Fannie Mae offers 3 percent down payment

Freddie Mac's sibling agency, Fannie Mae, has its own program for selling foreclosed properties but with different incentives and terms. The Fannie Mae HomePath program allows purchases of foreclosed properties with as little as 3 percent down and no private mortgage insurance (PMI) or appraisal fees. Unlike the Freddie Mac program, HomePath purchases are available to investors, as well as to those purchasing the property for use as a primary residence.

Those purchasing a home for use as a residence can also qualify for home renovation financing under the HomePath program. The program is currently open-ended, with no scheduled end date.

As secondary lenders that purchase home mortgages from primary lenders who originate the loans, Freddie Mac and Fannie Mae together account for the majority of U.S. home mortgages. Listings of available homes for purchase under the HomeSteps or HomePath programs, respectively, are available on the Freddie Mac and Fannie Mae web sites.

Published on October 12, 2009