| HUD HOMES |
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Frequently Asked Questions
What is a HUD Home? When an FHA loan is defaulted on HUD becomes the new owner by foreclosure.
How can I buy a HUD Home? Only HUD approved brokers can submit your bid for you. In California the property is marketed for 10 days and is open to all bidders, however priority is given to Owner Occupant Purchasers only. If there are no acceptable owner-occupant bids on the 11th day, then bidding becomes available to all purchasers on a daily basis.
Why do I have to get a Pre-Qualification Letter before I bid? A Pre-Qualification Letter must be obtained prior to bidding on a property, so you know how much you can offer to. We have multiple lenders ready to give you a pre-qualification usually within 24 hours.
How can I buy a HUD home for $100 down? In California, you can purchase a HUD home using an FHA mortgage with only $100 down payment (instead of the required 3.5%). This program is only available for owner-occupants.
What is FHA financing? There are three main types of FHA Financing. More information may be obtained from our preferred lenders familiar with FHA Guidelines.
203(b) Regular FHA Loan - Listed as "IN" • If the Property does not have any mandatory repairs FHA will insure the Loan.
203(b) - Repair Escrow - Listed as "IE" • When a property has less than $5000 in repairs to bring it up to Minimum Property Standards, FHA will insure the loan provided the repairs are completed by the Buyer or the Buyer's agent within 90 days from the date of Closing. • It is a cost to the Buyer that the Buyer can finance and add the amount to the mortgage. • The Lender monitors and keeps the funds in an escrow account for disbursement on completion of repairs to the Lender's satisfaction.
203(k) - Rehab Loan - Listed as "203K " • When the property has more than $5000 in Minimum Property Standards repairs to be done. • The Lender must obtain an Inspection report from an approved 203(k) consultant and a new appraisal.
What if my offer price is higher than the appraised value? With an FHA loan the buyer(s) must cover the overbid amount with a cash deposit and verify the reserves are available. The buyer(s) will not be allowed to build the overbid amount into an FHA loan. Other option is to use cash or conventional financing. |