There is some good news on the horizon! Recently, FHA announced that they have extended for another year a program that allows buyers of flipped houses to obtain Federal Housing Administration-backed loans. Last year, FHA lifted a ban that prevented buyers from obtaining government-backed mortgage insurance on homes bought less than 90 days after a previous sale. The ban, which was in place to prevent speculative home buying and selling, was set to go back into effect on January 31, 2011. It is hoped that lifting the ban for another year will aid the housing market churn through the massive amounts of foreclosure inventory that exists throughout the country.
Flipping refers to the practice of buying a home and quickly reselling it to make a profit. In 2003, FHA banned buyers from obtaining government-backed mortgage insurance on homes they purchased less than 90 days after a previous sale. The FHA temporarily lifted the ban a year ago to help investors sell foreclosed properties in an effort to aid the depressed housing market. That waiver was set to expire February 1, 2011.
By allowing investors to continue to “flip” homes, it gives buyers, especially first-time buyers, the opportunity to purchase a home that has recently been rehabilitated. It will also help to move more foreclosed properties off the market and reduce the number of vacant homes in neighborhoods throughout this country.
FHA has insured more than 21,000 mortgages worth over $3.6 billion on properties resold within 90 days of acquisition since last February, when the waiver was first issued. Mortgage lending is still very tight and loans backed by the FHA, which does not make loans directly but guarantees them for borrowers who meet certain restrictions, are the only option available to many borrowers. FHA-backed loans accounted for about 34 percent of mortgages used to purchase a home in 2010.
We have many investors in the Pikes Peak region that buy homes that need some cosmetic repairs so that they can turn around and sell them for profit. Extending this fix and flip program will encourage the investors to continue to fix and flip. It should also offer many of our first time buyers a terrific opportunity to buy something that is ready to move into without spending lots of money after they move in.
If you are interested in foreclosed properties for the purpose of fixing and flipping, we can send you updated lists of bank owned properties for your review. Or you might be a first time buyer that doesn’t want to do any work on your own. Either way, just email us or give us a call. We would be happy to help you make your dreams a possibility!
Barbara@BarbaraHarrisTeam.com or (719) 227-9900