Did You Know that there are 3 Categories of Columbus HUD Homes?
Written by Susanne Novak on January 15, 2009 – 11:32 am -Take a look at Columbus HUD Home property sheets and you will find that there are 3 categories of HUD Homes. They reflect the overall condition of a property and determine which type of FHA loan can be used.
Let’s begin with HUD Homes in good condition – Insurable Listings (IN). Homes designated as insurable qualify for “regular” FHA loans, also called FHA 203(b) loans. You can even use HUD’s “as-is” appraisal when you apply for FHA financing. That will save you around $300 in appraisal fees.
The next category is Insurable Escrow Listings (IE). These HUD Homes may require repairs to meet Minimum Property Standards “MPS” and qualify for a FHA 203(b) loan. A repair escrow is established at closing which allows the buyer to use additional borrowed funds (above the purchase price) to bring the property into MPS condition. Repairs cannot exceed $5,000 plus a 10% contingency. The maximum repair escrow for a specific HUD home is listed at the very bottom of the property detail page.
HUD’s Management and Marketing Contractors provide the details on repairs needed as well as the estimated cost. As a buyer you have 90 days after closing to complete these repairs. If money is left in escrow after you complete the repairs, you can use the funds to reduce the principal balance of your loan or do additional repairs in the home (with approval from your lender).
If you do not use FHA financing to fund the purchase of your Columbus HUD Home, no repair escrow will be established.
Finally, there are Uninsurable Listings (UI). These HUD homes need more than $5,500 worth of repairs. Here you may apply for a rehab loan, such as FHA 203(k) or the new FHA 203(k) Streamline financing. The lender will order an “as repaired” appraisal based upon repair estimates supplied by your contractors. Your lender can make one loan that includes both acquisition and rehab monies, if the renovated house appraises for the “as is” value plus the fix-up costs.
Knowing a good FHA lender with 203(k) experience is essential for this type of purchase. Read more about the 203(k) program at http://www.hud.gov/offices/hsg/sfh/203k/203kmenu.cfm and http://www.hud.gov/offices/hsg/sfh/203k/sfh203kc.cfm
We have a list of approved FHA 203(k) lenders, so don’t hesitate to contact us at the number or email below.
Thanks for reading our Columbus HUD Homes Blog
Posted by: Susanne Novak, ABR, FIS, GRI
Specializing in HUD Homes, Shortsales, Investment Real Estate
(614) 975-9650
Tags: Columbus HUD Homes Realtor insurable escrow FHA 203k
Posted in HUD How To | 4 Comments »
August 12th, 2009 at 7:32 pm
Can you use a VA loan to buy HUD ???
I’m interested in the hud home on Shawnee drive in Pataskla
Dan
August 13th, 2009 at 8:06 am
Hi Dan,
Yes, you can use any type of loan to fund the purchase of a HUD property. If you want to use VA, the property has to be in pretty good condition. IN (insurable) and IE (insurable with repair escrow) are the categories you should be looking for. Cosmetic repairs like paint and carpet are ok, but no major repairs. I have helped several clients with the purchase of a HUD where we used VA financing.
The property on Shawnee Dr in Pataskala that you were interested in went into contract earlier today: http://hud1.towerauction.net/cgi-bin/e24_select_property.cgi?id=413405507&office=e24&state=OH
About 33% of all HUD homes fall out of contract again, so there is a realistic chance that this one gets re-listed again!
Let me know if you have any other questions!
Susanne
July 2nd, 2010 at 1:31 am
My daughter and husband have been approved for an FHA loan. While looking at properties they found one that they really liked. The problem is that it is a foreclosed property. The home seems to be in very good condition with only what seems to be cosmetic work that needs to be done..(cleaning, painting). They have a realtor, and are putting a bid in, but I am a little worried that the bank will not accept them because its FHA. Is there anything that they can do to make this a smoother process?
July 4th, 2010 at 10:31 am
Hi Kathy, the agent your daughter is working with can hopefully spot potential “red flags” that would make a loan approval less likely. You mention they are putting in a bid – is it a HUD home? If so, then the process is ususally very smooth as long as your lender is familiar with lending on HUD owned properties and has a procedure in place on how to deal with some utilities not being on. So, check with your lender first and make sure they are ok with loaning on a foreclosure property. If needed, I can provide you with a list of lenders who are. Good luck!