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Clovis foreclosures are high on everyone’s list these days, but unfortunately, unless you have a stack of cash to pay for repairs, closing costs, and a down payment, most Clovis home buyers can’t take advantage of these bargain priced homes.  Until now.  Many Clovis buyers are unaware of an overlooked government loan that’s ideal for Clovis foreclosures.  Here’s how you can take advantage of this little known loan program and snatch up a Clovis foreclosure priced 20-30% below other Clovis homes for sale.

Clovis Foreclosure Woes

Every Clovis buyer these days wants a bargain.  Who can blame them?  Why pay full-price for a Clovis house for sale when you can get one for a fraction of the price?  Unfortunately, lenders won’t allow buyers to “roll” the repairs that often accompany a Clovis foreclosure into the loan.  In other words, if the foreclosure you want to buy needs $20,000 in repair to make it livable, lenders won’t lend one dime until those repairs are made.  That pretty much rules out everyone accept for cash buyers which predominantly are investors.  That is, unless you know this … there’s a little known government FHA loan that actually allows you to buy a Clovis foreclosure AND loans you money for repairs and upgrades.

FHA 203(K) Loan Program

The FHA’s 203(k) program has been around for years but it’s been rarely used.  However, that’s starting to change because the loan program is ideal for Clovis foreclosure buyers.  Here’s how it works.

With the 203(k) program you get financing to purchase an existing home (it has to be at least a year old) plus additional loan money to fix it. Since the government doesn’t want you to take that extra cash and go to Monterey Bay on vacation, it allocates the money in draws as the repair work is completed after closing.  This loan program, is ideal for Clovis foreclosure buyers because it covers both the cost of buying the home as well as the needed repair costs.

To qualify for the 203(k) financing you must use the Clovis home as your personal residence.  Investors are not allowed to use this loan program.  In other words, you can’t use the 203(k) loan program to buy a pure investment property, i.e., one you don’t use as a personal residence.

Why FHA 203(k) Financing?

You’ll have to pay slightly more for the FHA 203(k) loan because of all of the after-closing draws and inspections, but this program comes with attractive terms. For instance, HUD says you can get financing equal to the “as-is” value or the purchase price of the property before rehabilitation, whichever is less, plus the estimated cost of rehabilitation.  Alternatively, you can get a loan equal to 110% of the “after-improved” value of the property.  Keep in mind that the 203(k) program is an FHA loan. That means no prepayment penalties and no surprise rate increases. You’ll need to fully document income, debts and assets, but that’s standard for any loan these days.

One word of caution.  If you decide to go the 203(k) route, you’ll need to know the value of the Clovis foreclosure and you’ll need to have a good idea of what the repairs will cost.  Not all improvements can be financed under the program and the maximum available for repairs is $35,000.  For example, “Luxury items and improvements are not eligible as a cost rehabilitation,” says HUD. “However, the homeowner can use the 203(k) program to finance such items as painting, room additions, decks and other items even if the home does not need any other improvements. All health, safety and energy conservation items must be addressed prior to completing general home improvements.”

Clovis Mortgage Help

If you would like to know more about the FHA’s 203(k) loan program, contact Kathy Tuck.  She’ll answer all of your loan and Clovis mortgage questions.

Clovis Real Estate

At Clovis Real Estate we take pride in offering ideas and solutions that other Clovis Realtors aren’t aware of.  That’s because we’re Clovis Experts — we specialize in Clovis, CA homes for sale.  When you choose us as your Clovis Realty, you know you’re getting a professional Clovis real estate agent that knows Clovis better than anyone!  Thinking about moving to Clovis or relocating to Clovis?  Let us know!  We’ have a wealth of local Clovis information and we’ll help make your move easier and less stressful.