In especially hot real estate markets like Denver, many buyers are shifting their attention to non-traditional home sales, including short sales, foreclosure properties and REO (bank owned) properties. You may be wondering if first-time buyers are well-suited to purchase these types of homes, and while you may encounter a little competition, distressed properties are a viable option for many first time buyers.
First-time buyers include those who have either never owned a home or have not held title to real property for at least the past three years. Financing that caters to most first-time buyers includes low- or no-down-payment, government-insured loans offered by the Federal Housing Administration (FHA) or Department of Veterans Affairs (VA). Usually these types of financing can all be used for distressed properties.
If you’re looking specifically at purchasing a foreclosure, there’s another option created specifically for those types of properties. The 203(k) loan only applies to foreclosed homes in need of major repairs, and it can be vital to buyers, given one of the most common mistakes is to underestimate repair costs.
While you may have heard conflicting information on buying distressed properties, there really isn’t much difference between getting a home loan for a distressed property and a traditional property. Ultimately, lenders still issue home loans based on the borrower’s creditworthiness and the property’s estimated value.