Thinking of Buying a Bank-Owned Property?

For those buyers who are in the process of shopping for a new home, there are some great deals to be had on real estate in the “East Valley”.  Some of the best deals that you can find are on houses that may need a little work because they are either a bank owned property or a short sale.

It is not uncommon for a bank owned property to need a little “TLC” before you move in – whether it is a few minor landscaping issues or completely remodeling an entire kitchen.

If you have found a house that you can move into and just needs a little bit of work done, the FHA 203k streamline program is a loan program designed for properties that need improvements done and as a result of those improvements, will see an increase in the value of the home.

The FHA 203k Streamline Program

The FHA 203k streamline loan allows people to purchase a home that is in need of repairs to buy the home using a base loan amount and then have a reserve account set up for the designated repair work. With the FHA 203k streamline program, the money can be paid directly to the contractors from title so that you don’t have to worry about keeping track of the funds.

With the FHA 203k streamline program, you can have up to $35,000 set aside for repairs and while there are a few “extra” steps to the loan, it is not significantly more difficult to qualify for and get approved for a regular FHA loan. You can release up to 50% of the money that is set aside for repairs at closing with the other 50% to be released upon completion of the work.

Common FHA 203k Streamline Repairs

Some of the most common property improvements that people use the 203k streamline program for include:

• Remodeling the kitchen
• Remodeling a bathroom
• Repairing termite damage
• New exterior work (stucco)
• Replacing plumbing fixtures
• New flooring
• New roofing
• Various landscape improvements

If the total of the repair work that has been done is more than $15,000, then a final inspection by an FHA appraiser is required. If the work is less than $15,000, then no final inspection by an FHA appraiser is required. A mortgage or surety bond may also be required.

If the home that you are thinking of buying needs just a few improvements, the FHA 203k streamline is a great loan program. If the home that you are considering needs major improvements, there is also an FHA 203k loan (not the streamline version) that will allow you to reserve more than $35,000 but it is more in-depth and more difficult to administer and fund.

Arizona Mortgage Rates for January 28, 2009