how to buy a foreclosure with an fha loan

Investors often favor foreclosed homes, especially properties in poor condition, with the intent of renovating and re-selling them at a higher price.
A borrower who buys a foreclosed home with an FHA loan must move into the home within 60 days of signing the loan documents and live it in for a majority of the year.
A foreclosed home in need of significant repairs may qualify for an FHA 203(k) rehabilitation loan, which combines a purchase and construction loan in one.
Tough economic times result in two important facts for the housing market: foreclosed homes abound and Federal Housing Administration loans become increasingly common.
Higher FHA loan limits mean borrowers can compete for higher-priced homes with a down payment of 3.5 percent.
In January 2012, foreclosed homes sold for an average of 29 percent less than comparable non-distressed properties.

If you meet minimum requirements, and choose a property that meets Federal Housing Administration (FHA) standards, you can buy an REO property with an FHA backed loan.
Submit your offer or if you hired a broker, they will submit the purchase offer, escrow check and loan pre-approval letter to the bank or management company.
Consider hiring a real estate broker with FHA-backed loan and REO experience.
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Although nearly any type of home qualifies for FHA financing, the house you buy must be worth the purchase price and it must meet safety and habitability standards.
If the you want to purchase is in poor condition, you may be able to use an FHA 203(k) rehab loan to purchase the home and do the repairs after you move in.
Foreclosure owners are lenders and other entities that have no direct knowledge of defects and so aren’t required to provide the property disclosures that other sellers must share with buyers.
FHA rules say that sellers must do the repairs necessary for making the house meet FHA standards, and they must do so before closing.
Lucie, Riviera Beach, West Palm Beach, Boca Raton, Pompano Beach, Fort Lauderdale, Miami Beach, Belle Glade, Hialeah, Miami, Cutler Ridge, Homestead, Key West, East Naples, Fort Myers, Englewood, Venice, Sarasota Springs, St.
Includes FHA foreclosures in Rockford, Sterling, Rock Island, Kewanee, Monmouth, Macomb, Lincoln, Springfirld, Quincy, Jacksonville, Waukegan, Oak Lawn, Joliet, Kankakee, Normal, Decatur, Charlston, Effingham, Alton, East St.
Includes FHA foreclosures in Pensacola, Fort Walton Beach, Panama City, Tallahassee, Jacksonville Beach, Lakeside, St.
Includes FHA foreclosures in Sandpoint, Post Falls, Osburn, Moscow, Lewiston, Grangeville, Salmon, Weisner, Boise City, Ketchum, St.
Augustine, Palatka, Gainesville, Ocala, Daytona Beach, Deltona, Leesburg, Orlando, Merritt Island, Cocoa Beach, Melbourne, Vero Beach, Fort Pierce, Port St.
Includes FHA foreclosures in Hallock, Big Falls, Grand Marais, Bemidji, Hibbing, Virginia, Duluth, Moorhead, Fergus Falls, Brainerd, St.
HUD HOMES TOPIC MENU   Buying a HUD Home   Home Inspections   Financing   FHA Special Discount Sales Programs   Available HUD Properties   Additional Information Who Can Buy a HUD Home?Almost anyone! If you have the cash or can qualify for a loan (subject to certain restrictions) you may buy a HUD Home.
One type of government-backed home loan program does, but VA loans are for qualified veterans and currently serving military members.
There are many questions about the official FHA loan rules for occupancy for single-family home loans.
The peace of mind that comes with knowing that your mortgage loan and credit report have been approved will allow you to shop for your new home with confidence.
Some of your FHA loan closing costs may be financed, and some may–after being negotiated between buyer and seller–be paid by the seller within the boundaries of the FHA loan program’s rules.
In early 2006, a HUD press release announced an increase of nearly thirty thousand dollars in FHA-insured home loan money being made available to borrowers for single-family home mortgages.
The 203(b) FHA Fixed Rate Mortgage Loan Program is the widely used FHA home loan, especially among first time home buyers.
If you have had credit problems in the past, the FHA recommends a Consumer Credit Counseling program to avoid being denied an FHA loan.
If you have an FHA loan or HUD insured mortgage, you may have paid an "up-front" mortgage insurance premium at the closing of your house.
According to FHA rules, a borrower must occupy the home purchased with a single-family FHA loan as a personal residence as a condition of loan approval.
And when you find a home and are ready to make an offer the fact that you have already been pre-approved for your loan amount will give the seller confidence in you as a buyer.
If you have ever wanted to buy a home, but in the end decided to pass on the deal because of repair costs, you might be affected by the FHA loan rules for such situations under the right circumstances.
If you are a first time home buyer be sure the loan officer you choose is practiced with your State's Agency for assistance and grants for first time home buyers.
Be sure the Loan officer you choose is familiar with the MCC Tax Credit for firs time home buyers.
Trulia is also a good source of information and when you are ready to interview agents and loan officers you will find them from your area offering their services on Trulia.
Many buyers go through real estate agents who specialize in foreclosures, but if there’s a particular property you have an eye on, Blomquist says you can approach the lender directly after the foreclosure but before it’s listed for sale.
First of all, if you’re new to the foreclosure market, don’t even think about buying a property at a foreclosure auction, says RealtyTrac vice president Daren Blomquist.
If you’re seeking to purchase a foreclosure with an FHA loan, Blomquist says the requirements pertaining to the condition of the property are stricter.
The bank that owns the title isn’t going to make needed repairs for you before the sale, and it’s unlikely to lower the price to compensate you for repair expenses you’ll incur.
Factor the cost of any necessary repairs into your budget, since foreclosures are generally sold “as-is.” “Be aware with these REO or bank-owned properties that a lot of them are in pretty poor condition,” Blomquist says.
The bank is required to pay off senior liens like back taxes, you won’t have to kick out anyone living there and you’ll be able to inspect the homes for damage and figure out how much you’ll need to set aside for any repairs.
An increase in foreclosure activity might sound like bad news, but it’s actually a good sign for these markets because it means the logjam that’s been keeping housing in the doldrums is finally starting to break up.
Prospective buyers can’t inspect the home to determine if there’s any damage — highly likely if the house has been vacant for a while — or find out if there are any senior liens (such as outstanding taxes owed on the property).
I want to buy a 2 family foreclosed or bank owned home as my primary residence, but I do not have a big down payment.  I am looking to buy a home for 400K, and put down anywhere between 15-25K, with the rent I would receive from one of the habitations plus my employment income It would have approximately 3600 (gross work pay check) and 1200 (rental revenue) 4800 a month.
The new extenuating circumstances policy, to remain in place for three years, would have been a boon to Russell and Michelle Poland, who wound up in bankruptcy and foreclosure in 2010 after the recession undercut sales at their restaurant.
They found other jobs but had no shot at a normal loan for three years, so they wound up paying $10,000 in upfront fees and making a 35% down payment in late 2011 to obtain a 30-year mortgage at 10.99% interest.
Orange County mortgage broker Jeff Lazerson said he would have been able to get loans for dozens of customers shut out of the recovering housing market had the easier terms been in place these past few years.
Fannie and Freddie require borrowers to wait seven years after a foreclosure unless there are extenuating circumstances, in which case the wait is three years.
It also recently changed its rules so borrowers must pay annual premiums on FHA mortgage insurance for at least 11 years if they want its backing for a home loan.
To qualify for the break, borrowers must show that their foreclosure or bankruptcy was caused by external economic factors, reducing their income by 20% or more for six months.
Beyond that, the borrower must also prove that his or her credit was satisfactory before the economic event, meaning that his or her credit report was free from late payments or other major derogatory credit issues, and that since the foreclosure, satisfactory credit has been re-established over the past 12 months.
First, they must prove that the foreclosure or short sale was caused by what the FHA calls an "economic event" — a loss of income or employment, or a combination of both, that is beyond the control of the borrower.
The Federal Housing Authority has announced it is shortening the mandatory waiting periods for homeowners with a black mark on their credit, such as a short sale, deed-in-lieu, foreclosure or even bankruptcy, to buy again through an FHA loan.
Second, they must prove that they have "fully recovered" from the economic event that led to the foreclosure, short sale or bankruptcy.
Third, borrowers must complete at least one hour of one-on-one housing counseling from a Department of Housing and Urban Development-approved counselor at least 30 days but no more than six months before submitting the application for an FHA loan.
"I think it gives a real second chance to people," said Stuart Vener, a national real estate and financial consultant and president of the Wilshire Holding Group, a firm that helps underwater homeowners avoid foreclosure.
So if a borrower underwent a foreclosure due to a job loss, the borrower must then prove that he or she is employed and able to afford loan payments once again.
The FHA foreclosure house can then be purchased by anyone who has the cash to pay for it or who can qualify for a loan.  Those who are going to live in the home with their family get first priority over other prospective buyers.  If you are looking to buy an FHA HUD foreclosure home, you will want to find an HUD real estate broker as they are licensed and qualified to handle this sort of transaction.  However, most brokers for real estate are HUD-approved to handle the bidding process and help you learn how to buy foreclosures.
Something to keep in mind is that all of these HUD, VA, and FHA foreclosures are going to be sold as is, without a warranty.  Buyers are encouraged to have a house inspection completed before they purchase the home.  While the homes are generally in good repair, there are some homes which may not have been taken care of by their owners before the foreclosure took place.
Buyers who can document they lost their home to foreclosure or filed for bankruptcy because they were laid off or because their income was reduced by at least 20 percent will be eligible to apply for a loan after paying their bills on time for a year, according to the instructions the FHA sent lenders last week.
We lost our Home to foreclosure 2 years ago,just under the 20% loss in wages, wife had to work after our 2nd child was Born to make mortgage, after childcare puts us over the min 20‰¿ crazy to me but…..we have 700 credit scores and 20% down any suggestions.
Borrowers who lost their homes through foreclosure or short sale will no longer have to wait three years to get a mortgage to buy another home.
The program is designed to help potential buyers who went through a period of financial distress but have been able to get back on their feet and can afford a home again, says Jim Sahnger, a mortgage planner for FBC Mortgage in Jupiter, Fla.
Often, the lender doesn’t take title of the property until years after the discharge of the bankruptcy, which has delayed the start of the waiting period for many potential buyers, he says.
The FHA Back To Work – Extenuating Circumstances program is the FHA’s "second chance" for mortgage applicants who have experienced financial hardship as a result of unemployment or severe reduction in income.
The first is that you must have experienced an "economic event" (e.g.; pre-foreclosure sale, short sale, deed-in-lieu, foreclosure, Chapter 7 bankruptcy, Chapter 13 bankruptcy, loan modification, forbearance agreement).
The program can be used by anyone who’s experienced a pre-foreclosure sale, short sale, deed-in-lieu, foreclosure, Chapter 7 bankruptcy, Chapter 13 bankruptcy, loan modification; or who has entered into a forbearance agreement.
The Federal Housing Administration doesn’t change mortgage rates based on credit score.
Some of the more well-known rules require mortgage applicants to show a minimum credit score of 500; to make a downpayment of at least 3.5% on a purchase; and, to verify income via W-2 or federal tax returns.
The housing counseling required by the FHA Back To Work program will address the cause of your economic event, and help you consider actions which may prevent reoccurance.
Loans failing to meet FHA mortgage guidelines do not get insured and the Federal Housing Administration has been steadily tightening its requirements since last decade’s housing downturn.
Dubbed the "Back To Work – Extenuating Circumstances Program", the FHA removed the familiar waiting periods that typically followed a derogatory credit event.
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As a result, the FHA recently changed its mortgage rules so that some borrowers can qualify for a new FHA loan just one year after a foreclosure, short sale, deed in lieu of foreclosure, or bankruptcy as part of its new Back to Work – Extenuating Circumstances program.
Previously, borrowers were generally ineligible for a new FHA loan until three years after a foreclosure, short sale, or deed in lieu of foreclosure and two years after a Chapter 7 bankruptcy, though the death of a spouse or a medical emergency could cut the wait time to one year.
If you have gone through a foreclosure, short sale, bankruptcy, or deed in lieu of foreclosure, you can get a new FHA mortgage loan after waiting as little as one year, if you meet certain criteria.
The FHA reduced the waiting period to one year if you can show you went through a foreclosure, short sale, bankruptcy, or deed in lieu of foreclosure due to an external economic event, like a loss of income or employment (or a combination of both) through no fault of your own.
Talk to a lender about 203k loans as well whether you could be approved for a conventional loan (which don't have the condition restrictions of FHA loans).
You can buy a foreclosure with a FHA loan, however the condition and repairs that might be needed could force you into needing a FHA 203K loan.
If homes in your area are going for 400k and you are concentrating on homes in the 175k bracket, chances are they're going to need significant work to make them habitable.
As far as rules when purchasing a foreclosure… Just make sure that if you are going FHA you are using a lender that is highly experienced and can close FHA loans when they say they can.
But there is a list of defects that could prevent you from going with a traditional FHA loan as they will often require the owner to fix defects and banks don't fix defects.
And if you opt for a FHA 203k loan this would allow you to borrow the money to make repairs.
The only catch is your mortgage approval will need to include both the cost of the property and the additional amount for required repairs.
We have an FHA loan preapproval however in order to find a home close to work, we would need to buy a foreclosure.
Foreclosures often have a penalty for going beyond the closing date, and if you don't ask for the right time frame to close up front, there could be per diem penalties, loss of deposit, or even loss of the deal itself.
Here is a lender that I have used successfully on 203k loans on foreclosure property a couple of times now.

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