Freddie Mac Investor Loan

[Mark S.]

I posted this in another section of the forums, but I'm not sure if it was the right place, so I'm posting it here again:

I spoke with local bank today, and after offering me a 3/3 ARM with 15% down to which I told them I much prefer a fixed loan, I was told that they could likely do a Freddie Mac investor loan for 1-4 units. I was advised that they could probably get the down payment to between 5-10% down on a fixed rate loan. The catch, they told me, is that there would be about a 3.5% fee (of the loan amount) by Freddie Mac to do such a loan. This would be in addition to all other closing costs. Mortgage insurance would also apply until I had 20% equity in the property, and would then fall off. I am told that this loan could likely be done on a foreclosure as well. Finally, the bank said they could probably get me out of some of the normal closing costs with a slightly higher interest rate. My situation is limited cash, sizeable retirement accounts (for my age), and wanting to minimize having to touch retirement accounts (ie, backing out Roth contributions, taking a 401(k) loan, etc.). For this reason, I loan such as this really appeals to me, even with the additional fees, due to the fixed interest rate and low down payment. The alternative is 25% down on a fixed loan, no PMI or 15% down on an ARM. I guess my main question is: Do these loans really exist?