Distressed properties can be a great value for buyers in particularly hot markets where traditional homes may not be as affordable. In areas like Denver where home sale prices seem to be ever increasing, considering short sales, foreclosures, bank-owned properties, etc., can help increase choices for potential homebuyers. Just as with traditional sales, the first thing you’re going to want to do before looking at distressed housing is to get a mortgage pre-approval. This not only shows the sellers you are serious, but it also gives you a realistic idea of what you can spend on a house.
One of the cons of buying distressed properties is the fact that the buyer will undoubtedly need to make some repairs or improvements – these can range from minor cosmetic updates to more significant fixes. The good news is there’s a loan option that can help buyers in this situation. It’s called an FHA 203(k) loan and it is Department of Housing and Urban Development’s primary program for the rehabilitation and repair of single-family properties.
The program operates through FHA-approved lending institutions, which submit applications to have the property appraised and have the buyer’s credit approved. The best feature of this loan is that it can be rolled into the mortgage. This type of loan is appealing to buyers because they don’t have to have cash up front; you bring the home’s value up and roll it into your mortgage. In areas like Denver where affordable housing is in high demand, the FHA 203(k) really opens up what’s available on the market because if buyers are looking at a home thinking they can’t afford the renovations that will be necessary, they can get the expense wrapped up into one loan with one closing.
If you want to check out distressed properties in the Denver area, the first thing to do is get an experienced pro on your side. Contact Metrowest – we specialize in these types of purchases and would love to help you start the process!