One of the key factors serious buyers eye when appraising foreclosed homes for sale in the Kenai Peninsula market is condition – the shape those properties have been left in. The Federal Housing Administration has weighed in with a program that can materially affect how that condition – good or bad – will finally affect the bottom line: it’s known as the FHA 203 (k).
If you are among those currently looking at local foreclosed homes for sale, the 203(k) can make a big difference. Here are some points that might influence your decision:
First in line is whether the program is applicable. HUD tells us that for a local property to be eligible, it must be a one- to four-family dwelling that has been completed for at least one year. The number of units on the site must meet local zoning requirements. Furthermore, any and all newly-constructed units must be attached to the existing dwelling. Importantly, coops are out: cooperative units are not eligible.
The greatest effect is on local foreclosed homes for sale that need a lot of work. HUD guidelines indicate that properties that have been demolished, or will be taken down as part of the renovation, may be eligible — as long as at least some of the existing foundation remains.
As you might expect, none of this helpful news comes without some practical caveats. Although you may get this kind of FHA rehab help for a foreclosure, this is a labor-intensive type of loan requiring multiple appraisals (including “as-is” and “Value After Rehabilitation”), licensed contractor projections, and more. Since time factors are always important when dealing with a foreclosure, it’s important to choose your backup team carefully. You will need to select the right lender and consider enlisting a team consisting of a mortgage broker and real estate professional – both of whom have experience getting approval for FHA 203(k) loans. You want pros who understand the extra steps involved, not those who simply tell you what you want to hear.
Most likely, you will want to get actual pre-approval for the FHA loan (not just a prequalification letter). There is a lot of additional paperwork involved, and you will want to avoid a last-minute scramble once your desired property is on the line.
Buying local homes for sale taking advantage of the FHA 203(k) requires organization and preparation, but can be a great way to make a questionable rehab project on a local foreclosed home for sale affordable. If you have questions about buying the right property and the outlook for getting a 203(k) insured mortgage loan, get in touch with an FHA-approved lender in town or call me anytime for an introduction. Then — let’s get started!