Buying Short Sales using FHA Financing
203k Renovation Loan – an FHA Program and secret weapon for Buying Short Sales
How the 203k Renovation Loan works.
The 203k Renovation Loan is actually the perfect loan product to use on these purchases, in part because Sellers typically have no funds for repairs and want to sell in “As-Is” condition. I explained to my client that if you have a good 203k renovation ‘team’ (which consists of a Consultant-Lender-Contractor AND a Realtor who understands it) that Team will help you close your purchase in 45 days or even less!
Use the following strategy to help get the Short Sale offer accepted (the same strategy works well for other distressed property, REO’s, bank or government sales):
1) Get a PRE-Purchase Feasibility Inspection and Cost Estimate from a good 203k Consultant
2) Get an “Automated Underwriting Approval” from your lender (not just a letter from the loan officer)
3) Submit a copy of the Feasibility Report signed by the HUD 203k Consultant with your offer
4) Submit the complete Automated Underwriting Approval report (usually 5-7 pages) with your offer
5) Submit a cover letter that explains simply that:
a) you accept the property in it’s “As-Is” condition
b) you have already began the 203k process by paying for a HUD 203k Consultant to inspect and write up the Feasibility Report attached
c) the lender has completed an automated underwriting approval based on the HUD Consultants repair estimate
d) the offer is subject to appraisal only and will settle in 30-45 days from acceptance.
While it is true you cannot expect to compete with a cash, non-contingent offer, I believe this strategy will go a long way to helping you avoid wasting time submitting offers that are inherently flawed. At today’s interest rates, the 203k Renovation Loan is great tool.
No comments:
Post a Comment