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Financing
HUD does not provide financing for
the purchase of HUD properties. Properties can be
purchased by obtaining FHA financing, conventional or non-FHA
financing, or by paying cash. Regardless of the type
of financing you may obtain the Sales Contract Package requires
a pre-qualification letter from a lender or verification of
cash for a cash purchase. Therefore, it is important
that you speak with a lender prior to submitting a bid.
How
Much Home Can You Afford
Buy
vs Renting
203(b) - Repair Escrow - Listed as
“IE"
When a property needs less than $5000 in repairs to bring
it up to Minimum Property Standards, FHA will insure the loan
provided the repairs are completed by the Buyer or the Buyer’s
agent within 90 days from the date of Closing. It is a cost
to the Buyer that the Buyer can finance and add to the mortgage.
The Lender monitors and keeps the funds in an escrow account
for disbursement on completion of repairs to the Lender’s
satisfaction.
203(k) - Rehab Loan - Listed as “IK’
or “UI”
The property has more than $ 5000 in Minimum Property Standards
repairs to be done. The Lender must obtain an inspection report
from an approved 203(k) Consultant and a new appraisal. Contact
your lender for specific costs and details
All HUD properties are listed with FHA "AS-IS" appraised
value. If you are obtaining FHA financing and have bid more
for the property then the appraised value then the difference
must be paid in cash. This is because FHA will not insure
a loan for greater than the appraised value of the property.
The purchase price for the property cannot be changed after
the bid has been accepted.
Any non-FHA financing (including VA) is considered a conventional
loan. Conventional loans are not insured by the Federal Housing
Administration. If a purchaser is paying cash for a property
then a copy of a bank statement or a letter from the bank
is required as part of the sales package.
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