Can FHA Loans be used for Foreclosures?

Regardless of the home you’re purchasing – be it an REO property, a short sale, traditional sale or foreclosure – it’s crucial to get pre-approved for a loan before starting your search. It’s not a requirement, but getting pre-approved will give you an idea of how much house you can afford, which will ensure you don’t find the perfect property, only to find out you can’t truly afford it. Many buyers utilize FHA (Federal Housing Administrationfha-loans) loans, but can those types of loans be used for foreclosures? Read on and we’ll give you the scoop.

FHA-insured loans can be used to purchase a foreclosure as long as the house will be the borrower’s main residence. The FHA prohibits borrowers from using its loan support programs to purchase investment properties. A buyer must move into the home within 60 days of signing the loan documents and remain in the home for the majority of the year.

FHA 203(k) Mortgages:Many foreclosed homes are distressed and in need of repairs. Homes purchased with FHA-insured loans must be considered structurally sound, safe and inhabitable. FHA 203(k) mortgages are popular with homebuyers because they offer the opportunity to finance the purchase of the home as well as any renovation costs. These properties are often attractive to real estate investors who intend to renovate and sell the properties for profit. Buyers using FHA loans can find it difficult to compete with investors with large cash offers due to the simplicity and speed of the transaction compared to FHA-insured financing.

Are you interested in checking out foreclosure properties in Colorado? Contact Metrowest today – our experienced professionals will be happy to show you around!

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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