Friday, May 20, 2011
Financing Foreclosed Homes
Foreclosure properties, especially those with the water and power turned off, may not qualify for standard financing, but may qualify for a federally insured 203(k)loan. Buyers who are going to "owner occupy" the property and do not have enough money to purchase a foreclosure home using cash, may qualify for the federally insured 203(k) loan, which allows borrowers to roll projected rehab costs into the loan.
Since most foreclosure properties are sold "as is" and, oftentimes, heating, plumbing, and/or electric are problematic or inoperable, it's unlikely a conventional lender will lend money on the home. With a 203(k) loan, buyers generally employ an independent consultant hired by the Federal Housing Administration to review contractor cost estimates and architectural plans for things like whether the work will bring the property up to minimum standards, while not going overboard on improvements.
Buyers should be aware that not all foreclosure properties will be eligible. For instance, a partially built house that has never had a certificate of occupancy will require a construction loan of the kind that a commercial developer would use. We're also seeing more and more "unfinished remodeling job" homes today where the seller ran out of money and the building systems and/or structural definitions are lacking or insufficient. Those would require construction loans as well.
My friends at PACIFIC FIRST FINANCIAL will give you all the information necessary to investigate the 203K loan for your purchase. They also work with the CHF Platinum Program which is a Homebuyers Assistance Program featuring low interest rates and down payment along with closing cost assistance with Grants that do not have to be repaid. Call Sheila for the latest info at 310-214-9299.
Tote your toolbelt over to my office and I'll give you list of great opportunities in your neighborhood! We're always ready to work for you here at Team South Bay Realty, Your Realtors For Life!
Call Charlie @ 310-534-3940 or email: Charlie@TeamSouthBayRealty.com