Real Estate Insight

The New York Times

• Would-be owner-occupants who do not have enough money to purchase a foreclosurehome using cash, may qualify for the federally insured 203(k) loan, which allowsborrowers to roll projected rehab costs into the loan.
• According to one real estate expert, most foreclosure properties are sold as is, and, oftentimes, heat, plumbing, and electric are turned off, making it unlikely a lender will lend money on the home.
• To qualify for a 203(k) loan, buyers generally hire an independent consultant hired by the Federal Housing Administration to review contractor cost estimates and architectural plans for things like whether the work will bring the property up to minimum standards,while not going overboard on improvements.
• Buyers should be aware that not all foreclosure properties are eligible. For instance, apartially built house that has never had a certificate of occupancy requires a construction loan of the kind that a commercial developer would use.
• The interest rate on a 203(k) loan is approximately a quarter of a percentage point higher than on a standard FHA-insured loan, and a buyer also can expect to pay 1 or 2 points.
• Also, as with other FHA-backed loans, down payments may be as low as 3.5 percent, and loan limits apply. Currently, most FHA loans are capped at $729,750. Read the full story