Getting financing for HUD homes is a big concern for many buyers. I get the following question quite frequently: “We need to know how to go about getting financed for this HUD program. Could you possibly help us out?” So, let me try to clarify what’s actually involved in financing your Columbus HUD Homes purchase. You will be suprised that it’s much easier than you thought!
First, I need to clarify that HUD owned properties are offered for sale only, not for rent or lease. Many people confuse the HUD resale program which deals with foreclosed homes owned by the Federal Government with Section 8 Housing, which is designed to provide rental housing or rental assistance for low income families.
HUD does not finance the purchase of a HUD owned property. Just like with any other home purchase, you either have to be pre-approved for a mortgage by a bank or lender, or you need to have cash on hand.
Per HUD guidelines, the pre-approval has to come from a “direct lender”, which is a bank or mortgage banker that writes their own loans, not a broker that refers loans. HUD accepts all types of loans for financing your purchase: FHA, VA, USDA, conventional or construction loans. As you can see this includes loans that are backed by the Feds, such as FHA loans, VA (Veterans Administration) and USDA (Dept of Agriculture) loans.
Feel free to contact me for a list of experienced lenders.
For a cash purchase, you need a proof of funds in your name. A copy of your savings or checking account statement will do. Other options are CDs or a letter from your banking institution on business letterhead. Personal letters from family members promising to loan you the money for the purchase are not acceptable. If your parents plan to loan you money, they have to transfer the funds into your account.
Once we have the financing squared away, you will need an earnest money deposit of $500, $1,000 or $1,500 depending on the amount of your purchase. Now you are ready to start looking at Columbus houses. You will get the earnest money deposit back, if we don’t find a house. If you go into contract, you’ll get the earnest money deposit refunded at closing.
HUD offers special incentives for owner occupants, if you use FHA financing. This includes a down payment of only $100 and $2,500 for closing costs.
It’s really simple to finance your HUD Homes purchase, if you have all your ducks in a row. I can help you with every aspect of the transaction!
Thanks for reading our Columbus HUD Homes Blog
Posted by: Susanne Novak, ABR, FIS, GRI
Columbus Realtors specializing in
HUD Homes, Shortsales, Investment Real Estate
(614) 975-9650
