Creative Financing 101 » home repair loans http://creativefinancing101.com Guide to Zero Down, Bad Credit, FHA, Seller Financing, and Hard Money Loans Sat, 06 Mar 2010 00:37:43 +0000 en hourly 1 http://wordpress.org/?v=3.0.4 Buying Foreclosures with FHA Loans http://creativefinancing101.com/20162/buying-foreclosures-with-fha-loans/ http://creativefinancing101.com/20162/buying-foreclosures-with-fha-loans/#comments Fri, 06 Feb 2009 02:46:32 +0000 Jamie Beck http://creativefinancing101.com/?p=162 lender foreclosure
Buying a home that’s been through foreclosure has the same requirements as purchasing any property. It is possible to take out an FHA loan to buy a foreclosure home. However, there’s one big problem: foreclosure properties are often so trashed that lenders won’t issue a mortgage for them.

I once walked through a home where the previous owner had recently been evicted. It was clear that he left unhappily, and probably against his will. Junk was piled everywhere, major appliances were missing, and windows were covered over with saran wrap. The carpets were soiled, the hardwood was scratched up, and I could barely breath because of the smell. Many lenders wouldn’t dream of issuing a loan for a home in that condition.

This is where an FHA mortgage can come in handy. They have a special lending product, called the HUD 203(k) loan that allows borrowers to include the cost of repair projects in the mortgage. The loan amount is actually based on the estimated value of the home after the renovations are completed.

The FHA only insures these loans, they do not offer them. So, it’s possible to take out an FHA mortgage from just about any major borrower. If you find yourself looking at run-down foreclosure properties, this may be one of your best options.

Creative Commons License photo credit: TheTruthAbout…

See Also:

FHA Mortgage Guide

HUD 203(k) Mortgages

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