Ok, here’s the deal. A few questions hopefully someone can answer in a DETAILED format and not some quick over the counter answer. Serious answers only please as this is a serious matter.
I’m a first time home buyer. I’ve been searching for homes for quite awhile putting in bids and losing by a couple thousand each time or even worse, to cash investors.
I’ve turned to looking at HUD homes because I don’t have to worry about offering more than the appraisals or cash investors getting involved until after the owner occupant timeframe, giving me a chance to MAYBE buy my first home.
Here are a few questions that I can think of that no one can give me a simple, for dummies answer.
Accepted offer. what if I get a home inspection and it reveals problems NOT listed in the initial property inspection report, can i back out without forfeit or will HUD pay for repairs or adjust their price accordingly?
How much will the net be if i pay all closing costs? The house is in Southern CA, $115,000. FHA loan.
3.5% down – $4,025
6% closing/commissions/etc – $6,900
Total out of my pocket – $10,925 (this number is not exact, just a hypothetical)
Will the net still be $115,000 because I’m covering ALL my closing costs or is there some other formula for finding out that number?
If a property doesn’t have a big sign saying $100 down payment incentive, does any HUD home financed through FHA still qualify?
I’m working with GMAC Realty and Wells Fargo Mortgage, do I still qualify for the $100 down payment incentive? Is there a list of some sort that I can see that will show all APPROVED lenders/agents that I can use?
Upon closing, will i be receiving the hud document with all signatures or will i have to inquire with an attorney, of my own or theirs, to have all paperwork sent to me?
I will appreciate it greatly for anyone in the community who can take the time and answer these questions to the best of their knowledge.
If you are coming to the table with the 3.5% down payment, you simply deduct this amount from the purchase price, which is $115,000, therefore your net loan amount would be $110,975.
You would not be required to pay the commission of the real estate agent as HUD has a agreement that the real estate agent would be paid by them for a certain percentage or a flat fee, normally HUD pays a certain percentage. Therefore you would not be required to pay the $6,900.
Closing cost could be inserted in your purchase contract and see if HUD will pay all or a portion of this.
Closing cost consist of securing a title report, appraiser cost, escrow fees, points and fees you have to pay your mortgage company for doing your mortgage loan. These fees and cost differ in how much a house would cost.
Any closing cost would be paid by you at the closing out of your pocket and would not have anything to do with your mortgage loan. So when closing comes around be prepared to sign a check for the amount of closing unless you can get HUD to pay all or some per your sales contract.
If you are currently working with a bank or mortgage company they should have given you a Good Faith Estimate (GFE) by now indicating the approximate cost of your closing and how much you should contemplate bringing to the closing table.
If anything change during the coarse of your purchase such as interest rate or another cost is added you should be sent another GFE indicating this change.
The bank, mortgage company or your real estate agent should be able to tell you if you are qualified for the $100 down payment though I am sure this is just a come on and read something like "as low as $100 down."
Any lender that is qualified to do FHA mortgage loans will do just fine, you will find those that can do FHA mortgage loans. Most FHA mortgage loans require 3.5% down as you have stated.
Some HUD properties are sold as is without warranty. This will be a disclosure given to your by the real estate agent you are working with. If this is the case anything found by your inspector will be things that you would have to repair yourself after the purchase.
There are some that will give you an allowance for certain obvious things that need repair such as carpet, missing commodes and wash basins. Again these items would be listed along with the amount that HUD will pay for the repairs.
If there are things that need repairing you might see if you are qualified for the FHA 203-b mortgage loan. This mortgage loan will in addition to the purchase amount also include the repair amount. So if your loan amount is $115,000 minus the down payment then the repair cost would be added to this amount. So if the repairs came to $8,000 then this amount would be added to your loan amount.
This amount might be escrow account set up for the pay out of the funds for repair, meaning that when the repairs are made and an appraiser has verified that they are completed the escrow would release the funds for the completed work.
At the closing you would be given your HUD-1 final escrow closing cost.
I hope this has been of some benefit to you, good luck.
"FIGHT ON"
If you are coming to the table with the 3.5% down payment, you simply deduct this amount from the purchase price, which is $115,000, therefore your net loan amount would be $110,975.
You would not be required to pay the commission of the real estate agent as HUD has a agreement that the real estate agent would be paid by them for a certain percentage or a flat fee, normally HUD pays a certain percentage. Therefore you would not be required to pay the $6,900.
Closing cost could be inserted in your purchase contract and see if HUD will pay all or a portion of this.
Closing cost consist of securing a title report, appraiser cost, escrow fees, points and fees you have to pay your mortgage company for doing your mortgage loan. These fees and cost differ in how much a house would cost.
Any closing cost would be paid by you at the closing out of your pocket and would not have anything to do with your mortgage loan. So when closing comes around be prepared to sign a check for the amount of closing unless you can get HUD to pay all or some per your sales contract.
If you are currently working with a bank or mortgage company they should have given you a Good Faith Estimate (GFE) by now indicating the approximate cost of your closing and how much you should contemplate bringing to the closing table.
If anything change during the coarse of your purchase such as interest rate or another cost is added you should be sent another GFE indicating this change.
The bank, mortgage company or your real estate agent should be able to tell you if you are qualified for the $100 down payment though I am sure this is just a come on and read something like "as low as $100 down."
Any lender that is qualified to do FHA mortgage loans will do just fine, you will find those that can do FHA mortgage loans. Most FHA mortgage loans require 3.5% down as you have stated.
Some HUD properties are sold as is without warranty. This will be a disclosure given to your by the real estate agent you are working with. If this is the case anything found by your inspector will be things that you would have to repair yourself after the purchase.
There are some that will give you an allowance for certain obvious things that need repair such as carpet, missing commodes and wash basins. Again these items would be listed along with the amount that HUD will pay for the repairs.
If there are things that need repairing you might see if you are qualified for the FHA 203-b mortgage loan. This mortgage loan will in addition to the purchase amount also include the repair amount. So if your loan amount is $115,000 minus the down payment then the repair cost would be added to this amount. So if the repairs came to $8,000 then this amount would be added to your loan amount.
This amount might be escrow account set up for the pay out of the funds for repair, meaning that when the repairs are made and an appraiser has verified that they are completed the escrow would release the funds for the completed work.
At the closing you would be given your HUD-1 final escrow closing cost.
I hope this has been of some benefit to you, good luck.
"FIGHT ON"
References :
Normally, an offer is made subject to an acceptable Home Inspection. If issues arise from the home inspection, that you don’t feel you can live with, that is your "out" of the contract. HUD will not normally pay for repairs – homes are sold "as is". You can try to negotiate, but don’t expect a whole lot.
If you’re talking about the net of your loan – if your loan is $115,000, all closing costs are taken out of the loan proceeds, thus lowering the amount that will be applied to the actual purchase of the home, which is where the amount you will need to bring in out of pocket will come in to play. The loan itself will still be the $115,000. The 3.5% down is not included in the loan amount. That is what you are required to bring in regardless. And closing costs are not included in that figure. Also, don’t forget to add the 1.75% UFMIP which is added to the loan amount itself (unless you decide to pay that up front). In the case of $115,000 that is $2,012.50 added to your loan, making the actual loan amount at $117,012.50.
My understanding of the $100 down for HUD homes only applies to homes in certain states. I am not real familiar with that program, as my state is not on the list for approved homes for that program. From what I can see, it doesn’t appear that CA is on the list of states included in that incentive program, unless they have updated the list since the last time I checked. There is a list on the HUD website as to which homes are qualified for the $100 down. The caveat from what I can tell, is that you need to pay the full list price of the home.
Wells Fargo is an FHA approved lender, and most agents are, too, so you shouldn’t have any problem there. The HUD website has a list of approved lenders and agents.
You should receive all documentation and copies of all your paperwork at closing.
References :