So you want to buy a fixer upper.
There is a fine line between a home that needs a little work and a home that is not financeable.
Remember the days when you could use HUD's appraisal and get into a HUD home with a $500 down payment? Yeh, those days are over.
Whether a borrower is getting an FHA mortgage or a conventional mortgage, he now has to get his own appraisal. HUD does an appraisal so they know how to price their foreclosure. But they won't let the borrower use it.
The REALTOR® will also want to call BLB Resources and get a copy of the property condition report. You can do this before you make an offer. The PCR will tell you if HUD's appraiser decided the property needed repairs. HUD will not make repairs! If the property needs minor repairs totaling less than $10,000 to $15,000, you may be able to get an escrow holdback. Otherwise, your borrower will need a renovation loan or he'll have to pay cash.
HUD does not pay excise tax. They are a government entity and are therefore exempt from taxation. There is no excise tax on a HUD owned home.
In addition, HUD will not pay for owner's title insurance or the seller's half of the escrow fee. Borrowers will need to play accordingly.
There are no special programs, interest rates, or down payment requirements for a home buyer obtaining a conventional loan.
There is a special initiative for borrowers obtaining FHA mortgages. The Good Neighbor Next Door program applies if the borrower is a member of law enforcement, a firefighter, an EMT, or a teacher AND the property is located in a HUD revitalization area. The GNND program allows the borrower to purchase with $100 down. There are no HUD revitalization areas in Jefferson or Clallam County, WA. The last time I looked, there were a couple in Bremerton (they're designated by census tract).
If you have questions about buying a HUD owned home, feel free to give me a buzz.
