Blogs WRE City Group
FHA - How Can They Help You?
Posted on May 11, 2010
I think most people have heard of FHA but I am not sure if they are aware of all they have to offer the future homebuyer!
Here are some things FHA can help you with:
- Purchase a HUD REO property with a $100 down payment
- Allow you to purchase your home and do some improvements with one loan
- Law enforcement officers, pre-Kindergarten through 12th grade teachers and firefighters/emergency medical technicians can receive a 50% discount on list price
Here are some details for each program:
$100 Down: You may be able to purchase a HUD home utilizing an FHA loan with a down payment of $100. A HUD home is a 1-to-4 unit residential property acquired by HUD as a result of a foreclosure action on an FHA-insured mortgage. HUD becomes the property owner and offers it for sale to recover the loss on the foreclosure claim.
HUD Homes are initially offered to owner-occupant purchasers (people who are buying the home as their primary residence). Following the priority period for owner occupants, unsold properties are available to all buyers, including investors.
All properties available for purchase by the public are offered for sale on an Internet site maintained by management companies under contract to HUD. Any real estate broker registered with HUD may submit an offer and contract to purchase on your behalf. HUD pays the real estate broker's commission, if included in the contract.
HUD Homes are offered for sale at fair market value, based on a recent appraisal. Generally, HUD Homes are sold in what is known as an "Offer Period," during which a potential buyer's offer must be made. At the end of the Offer Period, all offers are opened and the bid providing the highest acceptable net return to HUD may then be accepted. Following the initial "Offer Period" homes remaining unsold are offered on an "extended" basis which means offers may be submitted any business day. If a bid on one of these homes is acceptable, the broker will usually be notified within 48 hours of HUD's acceptance of the offer.
203K or StreamlineK: FHA offers two programs in which you can purchase and repair/remodel with one loan. They are both similar; one is for a major remodel and the other for a more simple repair/remodel. The Streamline K is the most commonly used program in today's market. FHA allows a maximum of $35,000 to be added to your loan to make any FHA required repairs, wanted repairs or improvements. The regular 203K allows for more extensive repairs, remodels or additions to be done to the home. There is far more details on this program than I will list here, so please get in touch with me if you want me to send you more!
Good Neighbor Next Door Program (GNND): This program allows for Law enforcement officers, pre-Kindergarten through 12th grade teachers and firefighters/emergency medical technicians can receive a 50% discount on list price of certain HUD REO properties. These properties must be in what HUD considers to be a "revitalization area". How this program works is the borrower will obtain two mortgages when purchasing their home. The first mortgage is for 50% of the list price while the 2nd mortgage is for the remaining 50%. FHA will forgive and equivalent of 33% of the 2nd mortgage after the first 12 months, another 33% after the 24th month and the entire 2nd lien is released after the 36th month. This does require the borrower to remain living in the home for th entire three years. If they move out early, say after year two, then the remaining 1/3 of the 2nd lien would have to be paid. During the first three years the borrower resides in the home, there is no payment due on the 2nd mortgage.
If you have questions on FHA financing or other types of financing that are available, please contact me at dgeibel@cascademortgagewa.com or 509.232.7725.
If you would like more information on FHA financing or HUD homes, please call me at 509.232.7725 or email dgeibel@cascademortgagewa.com.
