Everyone is aware of the devastation to the real estate industry in the recent economic turn down. Leaving hundreds and even thousands of vacant homes across the nation the recession has also created a unique and perhaps once in a lifetime opportunity for home buyers. Investors have long known the power of purchasing bank owned properties at what they term "pennies on the dollar". Now this opportunity presents itself daily to the home owner, even the first time home buyer, as well as the real estate investor.
Investors already have the knowledge and experience for buying what are termed distressed properties at very low prices from the lender. Home owners, that is people who intend to occupy the purchased home as their primary residence, often are not aware of what is available to them in the area of mortgage and finance solutions.
Wade Munday of Peach Stone Capital has been a private lender to real estate investors for many years. Lenders like Wade offer loans only to investors who intend to purchase and renovate homes and then either sell them, refinance them or in some other way pay off the short term higher interest loans. Wade often receives calls from buyers looking to occupy the property who have been referred to him by their agent or a friend. What these people really are seeking is a different type of loan.
The Federal Housing Administration is one of the few resources for insured loans allowing a private home buyer intending to occupy the purchase to finance in the costs of renovation at the time of purchase. Offering two versions of their 203K rehab loan the FHA is receiving an increasing number of requests to fund this type of loan. While the 203K is available to private home buyers, home owners refinancing to upgrade and certain recognized entities it is not available to the individual investor looking to acquire and rehab properties for their investment pool.
Homes needing only a small amount of renovation may be purchased using the streamlined version of the FHA 203K loan which limits the amount of rehab to thirty-five-thousand dollars and the total loan amount to the maximum permitted for the area in which the property is located. Likewise the renovation cannot include any structural modifications such as new living space but it can include finishing a basement, replacing a roof or windows, upgrading a kitchen, and even adding new appliances.
Georgia still ranks high in the nation for the percentage of homes entering foreclosure. While many of these homes are never fully foreclosed due to mortgage workouts, modifications or short sales, there are still thousands of bank owned properties on the market. Some are in move in conditions yet others need the types of upgrades or repairs available using the FHA 203K Streamlined mortgage.
The Housing and Urban Development website provides great information about the 203K loan.
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