Are there special loans for distressed properties?

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!

Ken Blevins

About Ken Blevins

Ken Blevins, CEO of Metrowest Real Estate Services, is a veteran in mortgage and default servicing with more than 24 years of experience in collections, foreclosure/bankruptcy, loss mitigation and real estate disposition (REO). Blevins was an original co-founder of Metrowest in 2003, a Real Estate Brokerage and Services Company focused on the resale, recovery and liquidation of distressed real estate in Denver, Colorado and surrounding metros. Blevins assumed the role of CEO in January 2014 and provides strategic direction and has management accountability for the day-to-day operations. Under his direction, Blevins drives all default management operations to maximize asset value recovery and reduce loss severity through a strategy focused on customer service and state of the art technology. Blevins has 18 years of direct operational experience in all facets of REO Asset Management having managed large national REO Disposition contracts for Fannie Mae, Freddie Mac, Wells Fargo, JP Morgan Chase, CitiFinancial, GMAC Mortgage and other various financial institutions. Blevins specialties include REO asset management, real estate investment, bulk REO acquisitions and distressed asset recovery and liquidation, and he has directed the resolution and liquidation of over ten billion in institutionally-owned residential real estate.

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