Tough economic times have your important results for the housing market: an increase in the Federal Housing Administration (FHA) loans and the increase in amount of foreclosed homes available. An FHA loan allows homebuyers to buy a home when they would not otherwise be able to. When combined with a foreclosed home, homebuyers are able to purchase a home for an extremely low amount. So what are the requirements for buying a foreclosed home with an FHA loan? Let’s take a look.
The Basics of an FHA Loan
FHA financing is one of the easiest home loans for most buyers to get. With a low down payment and some education, this loan is extremely easy for most buyers. But there is a catch to buying a home with an FHA loan. The house you wish to buy must meet certain criteria. It must be worth the purchase price and it has to meet certain safety and habitability standards. Although some people would say this is restrictive, it can actually be helpful when purchasing a foreclosed home. Foreclosure properties are often sold as-is and in bad shape, but to buy one with an FHA loan, it will need to pass through some hoops.
In order for your FHA loan to be approved for a foreclosed home, you will need to have the home appraised and inspected. Your fee appraisal will assess the home’s value while looks for defects and safety concerns. During the home inspection, the inspector will look for problems that the lender may not be knowledgeable about. Because many foreclosures need major repairs, many of them do not meet the livable requirements for an FHA loan. However, some property owners like HUD and Fannie Mae often bring their property up to these standards. So how do you buy a foreclosed home that doesn’t meet these standards? With a special FHA loan called an FHA 203(k) loan. This special loan allows you to buy a foreclosure that is in poor condition and to do the repairs once you have moved into the home. The 203(k) does have different standards and a higher interest rate than regular FHA loans. You may also have to use an FHA consultant and FHA-certified contractors for your property.
For more information on buying a foreclosed home with an FHA loan, call Simply Referable today!
Foreclosed Homes with Simply Referable
Together, with your Simply Referable team, you’ll cut the right deal for the right price with qualified guidance every step of the way. Every team member is committed to selling your home and forming a lasting bond with your family. Thanks to our roots in the Maryland/DC region, we can help you find your dream home. Contact us online and give us a call at 410-983-9045. To see some of the stunning homes we work with, follow Simply Referable on Facebook, Twitter, Google+, Pinterest, YouTube, and LinkedIn.