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When Buying a Foreclosed Property With FHA-Insured Home Loan, Be Sure to Know the Rules

Question: We are about to purchase a foreclosed property with an FHA-insured home loan. Can the loan also be used to make repairs?Answer: Homebuyers who purchase a foreclosed home, and who need financing for repairs and renovations, may find relief in the Federal Housing Administration’s home loan program. A 203(k) Rehabilitation Mortgage Insurance Program loan allows borrowers to include the cost of repairs and improvements into their home financing. However, these loans also come with restrictions. The loans are limited to owners/occupants. Also, a licensed contractor must be used to perform the work. The work must begin within 30 days of closing and be completed within six months thereafter. A real estate attorney can provide further details and help guide you through the process. For more information about Illinois law, visit www.illinoislawyerfinder.com.  If you have a legal question, send it to illinoislawcolumn@isba.org.Illinois Law Now is a series of newspaper and internet posts prepared by the Illinois State Bar Association that address legal issues of interest to the public. For additional information about the law, visit http://www.illinoislawyerfinder.com/legal-faqs 

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