REO Financing Basics

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Regardless of the type of property you’re looking for – single-family, condo, short sale, etc. – we always recommend getting pre-approved for a loan prior to starting your search. This helps keep expectations in check and helps you stay in line with a house you can truly afford. The same goes for REO (bank-owned) properties. Here we’ll highlight common financial topics that can come up if you’re considering an REO property.

Interest-only loan:
This type of loan may be ideal if you don’t intend to live in your REO and are buying it as an investment. With this option, you only are only required to pay the loan interest each month, usually for a period of five to 10 years before you must begin paying off the principal.

If you go with this type of loan you’ll pay less initial monthly payments, which allows you to invest saved money into the property. But keep in mind that without careful planning, you could be stuck with high payments and no savings. Also remember your principal won’t go down if you only pay the required installments over the interest-paying period

Credit and mortgage rates:
Your credit history and your intent can also affect mortgage rates. Some lenders may see REO investors—those who don’t live on the property—as a higher loan risk and adjust their rates accordingly.

Assistance:
Some lenders offer mortgages that include money for repairs, such as Fannie Mae’s HomePath loan and an FHA 203(k) loan. Both of these programs are intended to help buyers with fixer-uppers.

Ready to start checking out REO properties in Denver? Give us a shout – Metrowest specializes in distressed properties and we’d love to work with you!

 

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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