Foreclosed Property Specialists

Financing Your Bargain

Institutional sellers always prefer buyers who are pre-approved for a loan.

As we've discussed elsewhere in this website, getting pre-approved for a mortgage (if you can't make an all-cash purchase -- and how many of us can?) is critical to securing a contract to purchase a foreclosed home. Institutional sellers much prefer to negotiate with buyers who can show the financial ability to buy a property -- with a pre-approved loan -- over those that must still find funding to purchase.

So where should you look for financing? It always pays to shop around for a mortgage -- ask us for a list of reputable mortgage lenders who have helped our clients in the past.

Some sellers of foreclosed homes -- both lenders and government agencies -- offer attractive mortgage packages to buyers of their foreclosed properties. You may find financing offers that include reduced down-payment requirements, lower interest rates and other benefits.

One government program of particular benefit to buyers of foreclosed homes has been available since 1978 -- the 203(k) Rehabilitation Mortgage from the Federal Housing Administration (FHA). This program provides qualifying home buyers with a single loan to finance both the purchase price of a home and the costs of qualified repairs/improvements -- with just a 3.5% down payment

If you think this loan program could help you purchase a foreclosed property that needs improvements, understand that there are two types of 203(k) mortgages:

1. The "Streamline" 203(k) is the fastest, easiest 203(k) but limits spending on renovations to repair costs under $35,000 that do not involve structural changes to the home.

2. The full 203(k) allows borrowing for structural repairs and/or improvements in excess of $35,000 but involves a more-complex process, including a HUD-approved consultant to determine repairs and administrative installment payment draws.

For further information on FHA's 203(k) loans, go online to: www.TinyURL.com/n8nj8y.