How to buy a foreclosure in Lancaster? Buying a foreclosure can be difficult, unless you are able to pay cash. Many homes that have been foreclosed upon are not in the proper physical condition to meet lender and loan program guidelines.
This scares many buyers, Realtors and lenders away from foreclosures. It is for this reason, many foreclosures sit for months and years at a time or are purchased by investors for rehab and flipping or renting out. Now there's a solution for home buyer's that see the diamond in the rough and want to buy a home under value and make it their residence.
There are two types of loans that can be used. A 203K loan, which is a FHA loan that also allows for rehabilitation/remodeling costs to be added into the financing. These loans only require a 3.5 down payment however, the higher MIP (mortgage insurance premiums) can be higher than some people want to pay. Especially those that qualify for conventional financing.
The other program is a conventional renovation loan. This is a program that is sponsored by Fannie Mae (https://www.fanniemae.com/content/fact_sheet/homestyle-renovation-factsheet.pdf). This program requires a minimum of 5% down payment which is based on the sales price of the home plus the cost of renovations or the appraised value whichever is less. (Renovations must be completed by a licensed general contractor).
Almost any type of work required can be contracted for and completed... Depending on your down payment, the home will have to appraise for at least the cost of the home plus the renovations combined. And that is part of the beauty of the loan, we will use the "future" value of the home to determine your financing and loan to value.
This is a really good way to buy a home at under market value, do some rehab work and potentially end up with a really nice home with a lot of equity in it. Working with a lender like FAIRWAY Independent Mortgage that understands the program and a really good Realtor will help your process. Call us at 717-431-9299 for more information on How to buy a foreclosure. Ken Pederson firstname.lastname@example.org FAIRWAY Independent Mortgage Corp. NMLS: 134943 Branch NMLS: 2289