In half of the US you can buy HUD homes with only $100 down. Unfortunately, Ohio is in the other half.

HUD just reinstated the $100 down program in 2 of their 4 national regions. It appears that they picked the ones with the largest inventory of homes.

HUD homes sold really well in Ohio during the past 12 months. Our inventory is very low. The number of HUD listings decreased from more than 400 HUD homes at the beginning of the year to around 100.

The $100 down program is one of the best incentives for owner occupant buyers. Instead of the regular 3.5% down payment, you only need to bring $100 down on FHA loans. In addition, HUD contributes up to 3% toward your closing costs.

I believe that we won’t see the $100 down program in Ohio anytime soon. We probably don’t need it to sell these homes, anyway.

However, if Columbus home sales continue to dip in November and December (as they usually do), HUD may reconsider and offer this great incentive to help buyers get into a HUD house with only $100.

There are 2 other incentives that make HUD homes more attractive than other foreclosed properties, even without the $100 down payment program:

• HUD houses are offered with repair escrows when you finance with an FHA loan. You don’t have to get a rehab loan to cover minor repairs of less than $5,000. This will save you time, as regular FHA loans tend to close much faster than 203k rehab loans.
• HUD homes are appraised for FHA financing. This means that you don’t have to pay for a separate appraisal. This will save you $300 to $400 and cut the time for loan approval by at least a week or two.

We just received this new announcement from HUD: Buyers who want to purchase an Ohio HUD home using the $100 down FHA program may now bid ABOVE the HUD as-is appraised value and get a second appraisal to justify the higher value.  Initially, HUD insisted on lenders using their existing appraisal. This created problems for buyers who offered more than the HUD appraisal, as they had to pay the difference to the contract amount in cash.

Here is the news release from HUD:

UPDATE OHIO $100 DOWN PAYMENT INCENTIVE PROGRAM FOR FHA FINANCING 

8/20/09: The $100 down payment financing is available on most properties through FHA approved lenders. Please note that the $100 down offer applies if the purchase price is over $25,000 and is less than or equal to the appraised value of the property. If the purchase price is greater than the appraised value, the purchaser may obtain a new FHA appraisal to support the higher mortgage amount or must pay cash in the amount of the difference between the appraisal and the purchase price less $100. For a copy of the flyer please click here . Buyer is responsible to secure an approved lender who will accept a new appraisal. 

Please Note: Not all lenders offer the $100 down FHA program, and not all lenders will allow you to order a second appraisal. BEFORE you submit a bid above HUD’s as-is value, you should confirm with your preferred lender, that they will order a new appraisal!

I am working with a HUD approved lender who will offer both, the $100 down FHA program and the second appraisal. Call me for details!

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

In recent weeks we encountered an issue with the Insurability Status of HUD Homes. It appears that homes listed as insurable (IN) by HUD may still not meet all FHA requirements of the lenders and their underwriters. If you buy your HUD home with an FHA loan, you need to use the appraisal provided by HUD. However, in some of these appraisals the property condition is specified as “below average”. Banks are not willing to write standard FHA loans, if the property condition is “below average”, even if HUD lists the property as insurable.
 
Here is what you need to do: instead of using a standard FHA loan you may have to use one with a repair escrow or even use the FHA 203(k) Streamline program. We recommend that your lender immediately asks for a copy of the appraisal when an offer has been accepted – we will make sure to remind them – so that we can work together to remedy any potential underwriting issues and get loans closed without any delays.
 
We believe that HUD and NHMSI may not be aware of this inconsistency. We have notified them and asked for clarification. You’ll be the first to know when we hear from them!
 
We are once again near a record low when it comes to HUD Home listings in Central Ohio – only 56 this week. HUD added only 11 new homes this week, however, there are plenty of relists. Some of them you will probably recognize.

Listing Statistics

Total homes available: 56 (last week: 71)

Owner occupants: 34
All bidders: 22
New listings: 11
Relisted/Price reduced: 23
 
Median Price: $66,500 (last week: $74,000)
Average Price: $75,395 (last week: $78,740)
Highest Price: $196,000
Lowest Price: $3,600
 
Homes less than $50,001: 19 (last week: 23)
Between $50,001 & $100,000: 25 (last week: 30)
More than $100,000: 12 (last week: 18)
 
Call me TODAY at 975-9650 and check out a HUD Home this weekend!  

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

This question may seem strange, however, you probably noticed that many of the nicer Columbus HUD homes have been selling above list price. You may wonder, if there are any disadvantages by bidding higher than list price?

Many people fear that they pay too much for a house. When you get caught up in a bidding war with other buyers, you may end up offering more than you had planned. However, many HUD homes are worth more than they are listed for (an experienced realtor can give you the correct value and comparable sales). Sometimes you get a great deal, even if you pay more than asking price.

When it comes to financing your purchase, you may encounter problems when you offer more than the appraised value. Let’s look at different financing options and the consequences of bidding above list price:

As a Cash Buyer you can offer as much as you like, even above the appraised value or list price. Just offer what owning the property is worth to you. Nobody else cares.

Buyers using Conventional Financing are required to get a new appraisal. As long as your lender’s appraised value of the property is equal to or above the purchase price, you are good to go. Should your lender’s appraisal come in lower than your purchase price, you may be able to make up the difference in cash, ask for an appraisal review or even order a second appraisal.

When you finance Columbus houses with a VA Loan, your lender’s appraisal again has to come in at or above the purchase price. If this is not the case, you may ask for a reconsideration of value or offer to pay a higher interest rate, so your lender can credit you back some money to offset the difference.

==> Good News for Buyers Using FHA Financing! Read an Important Update from 8/20/09!

==> Unfortunately the practice of allowing 2nd appraisals has been discontinued!

Depending on which lender you use, you might not have to worry about the following scenario.

Buyers financing their purchase with an FHA Loan must watch their offer closely!  The value of a HUD property is provided by the HUD appraiser and posted on the property detail page as the “As-Is Value”. This is also the initial listing price of Columbus HUD homes. This appraisal is valid for 6 months.

If you offer more than the as-is value of a HUD home and want to get an FHA loan, you will have to make up the difference with your own money. HUD will not allow you to order a second appraisal for an FHA loan, even if you feel the property should be worth more than HUD appraised it for.

The same is true for 203(k) Streamline loans. Although you order a separate appraisal to determine the as-repaired value of the property, the original HUD appraisal (as-is value) still stands for the base amount of the loan.

Here’s the good news: You still can get the $8000 tax credit if you are a first time buyer, no matter how much you offer on the house (as long as it’s at or above $80,000), because the tax credit is based on the purchase price and not the appraisal.

I hope this article is helpful for you and provides you with ideas for your bidding strategy.
Please contact me if you have any questions or want to place a bid on a HUD home!

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

First, I would like to answer another question from one of our readers:
 
Question: How good a credit score do you need to qualify for buying a HUD Home?
 
Here’s our answer:
Your credit score is only important, if you try to get a bank loan to finance your HUD home. The credit score does not have anything to do with the home purchase itself, only with the financing of the home. For a cash purchase, all you need is proof of funds (bank statements in your name showing that you have enough money in the bank).

In order to get an FHA loan, most banks are looking for a credit score of 620 or higher. I do have lenders who will underwrite a loan with a 580 score. Contact me for details. In addition, proof of alternative credit (e.g. utility payments, car payments and rent payments made on time for the past 12 months) will help you overcome a lower score.
 
For conventional loans, banks look at credit scores of 680 or higher, and will require a downpayment of 5% to 20% of the purchase price.

Featured Homes of the Week

The 3 Columbus HUD homes we decided to feature this week are on a North to South axis, starting with a large home in Lewis Center, leading us south to Grove City and Groveport. All 3 Columbus houses are newer, suburban residences and very good values for first time buyers. 

9073 MISTY DAWN DR, Lewis Center, OH
List Price: $175,000  2,286 sqft  4 BR 2.5 BA

726 SCIOTO MEADOWS BLVD, Grove City, OH
List Price: $162,000  2,078 sqft  3 BR 2.5 BA

 
4452 LANDMARK RD, Groveport, OH
List Price: $128,000  2,112 sqft  4 BR 2.5 BA

You can see more previewed HUD homes at our website: http://columbushudhomes.postlets.com
 
Here you will also find a complete and up to date list of all featured Columbus HUD homes that are still open for offers, including relisted properties.
 
Call me at (614) 975-9650!

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