Like many other MN Homes, Shakopee foreclosures are just as prevelant. To purchase some of those detressed foreclosure properties you need a LOT of $$$$ to repair the MN homes to bring them up to par, because the banks won’t lend the money to buy the house until the repairs are complete. I recenlty had a client use a great program for Shakopee foreclosures. The program is called the FHA 203k loan program and I used Wells Fargo in Shakopee to do the MN FHA 203k loan program we just closed on. There are a few other companies that do the MN FHA 203k loan program, but not all loan officers do, so make sure to check if you are looking in a price range that may need repairs.
More MN FHA 203k Loan Program Information
- The downpayment requirement for an owner-occupant (or a nonprofit organization or government agency) is only 3.5% of the purchase price and repair costs of the property.
The MN FHA 203k loan includes the following steps:
– A potential homebuyer locates a fixer-upper and executes a sales contract after doing a feasibility analysis of the property with their real estate professional. The contract should state that the buyer is seeking a 203(k) loan and that the contract is contingent on loan approval based on additional required repairs by the FHA or the lender.
– Find an approved MN FHA 203k loan officer
-Submit repair bids from A LICENSED CONTRACTOR, if you are not licensed, you CAN NOT do the work.
– The appraisal is performed to determine the value of the property after all repairs are completed, they don’t need to be completed prior to closing, but they do the appraisal as if those repairs were completed.
– If the borrower is approved through the loan officers underwriting , the loan closes for an amount that will cover the purchase or refinance cost of the property, the remodeling costs and the allowable closing costs. The amount of the loan will also include a reserve of 10% to 20% of the total remodeling costs and is used to cover any extra work not included in the original proposal.
– At closing, the seller of the property is paid off and the remaining funds are put in an escrow account to pay for the repairs and improvements during the rehabilitation period.
– The remodeling can begin after closing.
– Escrowed funds with the title company on MN homes are released to the contractor during construction through a series of draw requests for completed work. To ensure completion of the job, 10% of each draw is held back; this money is paid after the lender determines their will be no liens on the property.
If you would like more information about the FHA 203k loan program, a good loan officer familiar with the process or Shakopee foreclosure list make sure to contact me.