Following my blog a few months back about buying Austin foreclosed homes with an FHA loan, here’s a guest post from Rob with MortgageLoanPlace.com:
“Foreclosures are mounting across the country as borrowers continue to grapple with economic fallout and the subprime mortgage collapse.
Despite stories of loss and despair, these problem properties have become a prime opportunity for some choosy buyers ” and many are turning to FHA loans to help scoop up foreclosed properties at exceptional prices.
Government-backed loans, FHA loans in particular, are a prime way for borrowers to capitalize on the foreclosure market.
In fact, the FHA runs a program that meshes perfectly with the glut of foreclosures on the market. The FHA 203k program provides home loans for properties in need of work.
There are fixed-rate and adjustable-rate options with down payments as low as 3.5 percent. These flexible loans can even be used for infill projects, provided some part of the home™s original foundation is still intact.
The 203k loan can cover a host of rehabilitation and improvement costs, from decks and painting to room additions and HVAC systems. Other qualified improvements include:
- Roofs and gutters
- Plumbing and electrical
- Windows and doors
- Weather stripping and insulation
- Stabilizing or removing lead-based paint
- Basement completion and waterproofing
- Septic or well systems
Prospective borrowers need to remember that the 203k program does have more stringent qualification criteria than a normal FHA loan. The rehabilitation work must begin within 30 days of the property closing and be completed within six months. There are a few exceptions.
The FHA typically bases the loan amount on an estimate of what the home will be worth once the work is finished, including the costs of rehabilitation.
The U.S. Department of Housing and Urban Development hosts a database of foreclosed properties nationwide.”