Purchasing Distressed Properties
On the front side it may seem like a smart idea to purchase a distressed property or a foreclosure especially if you are handy and can do a lot of repairs on your own. It can be! But there are a few things you need to know before making your purchase.
It will matter whether you are paying cash or obtaining a loan. If you are lucky enough not to need a loan you are home free. If however you do need a loan to purchase the lender will qualify the home as much as they qualify your financeability. And if the home has glaring defects such as missing carpet or flooring, peeling paint on exterior, problems with plumbing or electricity or any number of other defects the home won’t pass the appraisal until the items are handled. And you do not want to complete repairs on a property that you do not own yet so what is the answer.
A renovation loan or 203k loan could be perfect for financing the necessary repairs into your loan allowing the repairs to be completed after closing. A catch however is the repairs will have to be done by a licensed general contractor. So it won’t work if you wanted to do the repairs yourself to save money. Also it will be necessary to get several quotes from general contracting companies and present them to the lender. After closing the money for repairs will be kept in escrow for use as the repairs are made.
I hope this has helped with understanding what is involved in purchasing distressed properties. Give me a call so I can point you to an awesome mortgage professional and we will get started looking for your new home!
Debbie Dove, 843-633-3315, Agent Owned Real Estate