HUD, 203K, & FHA loan questions

[Anonymous]

The house my husband and I are really liking is a foreclosed home. It's HUD approved with the 100 dollar down program. This is what the realtor is pushing with this house. It does need some work, nothing major, but definitely cosmetics and updates need to be made. We have an approval in just my husbands name, we done a lot to boost my credit lately and the LO is hopeful that mine should reach 620 within the next two months, so we are waiting to see what happens...but what I'm wanting to know is if we do a 203K FHA loan will the $100 HUD FHA still count?

[Anonymous]

Also, who a preferred company to go with? We are currently working with Wells Fargo, but I have heard negative things about them recently...

[203bravo]

You would not be allowed to use the 100$ down program with a 203k loan.  The 100$ program restricts the loan value to be no more than the current "as is" appraised value of the home.  Also, the program is very specific that the only additional expense that can be financed into the mortgage would be up front MIP, as long as the home offer price plus UFMIP does not exceed the 100% appraised value.  It excludes such other expenses including any closing costs.

Best of luck.

[webhopper]

I would listen to 203bravo. I might add that you will probably be better off and have less headaches by buying the house as is and then doing the upgrades yourself as is. That way you can pick what you want instead of worrying about if the upgrades are FHA Approved.

Also you can pay for the upgrades as you go rather than financing them and paying interest on them for 30 years.

[Anonymous]

I'm not sure of the details, correct me if I'm wrong....but I thought with an FHA loan there are certain things that have to pass inspection in order for the loan to go through. The house is a foreclosure and the big issues that need done are: siding (it was put on wrong and causes leaks), basement has mildew (mildew in the walls, need to cut out and replace about 1800 sq ft of sheetrock, at least 4 ft up the wall), and the HVAC unit is trashed and needs replaced (this is listed on the HUD sheet, and said it would be included if we did a 203k, not sure of more details).

There are also a lot of smaller issues: paint, flooring, kitchen cabinets, etc...that we will be taking care of ourselves.

IF the house will pass an FHA inspection, then we would gladly do a regular FHA and finance the repairs ourselves...I'm just not clear on the underlying details. The house is listed WAY below value price...I'm not sure if this helps.

[webhopper]

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@Anonymous wrote:

I'm not sure of the details, correct me if I'm wrong....but I thought with an FHA loan there are certain things that have to pass inspection in order for the loan to go through. The house is a foreclosure and the big issues that need done are: siding (it was put on wrong and causes leaks), basement has mildew (mildew in the walls, need to cut out and replace about 1800 sq ft of sheetrock, at least 4 ft up the wall), and the HVAC unit is trashed and needs replaced (this is listed on the HUD sheet, and said it would be included if we did a 203k, not sure of more details).

There are also a lot of smaller issues: paint, flooring, kitchen cabinets, etc...that we will be taking care of ourselves.

IF the house will pass an FHA inspection, then we would gladly do a regular FHA and finance the repairs ourselves...I'm just not clear on the underlying details. The house is listed WAY below value price...I'm not sure if this helps.

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What about the HUD program.  Does it require the repairs to be made?  Also, keep in mind that if the basement itself was not properly sealed so that ground water is seeping in, you may have a perpetually leaky basement. I would check that out via an inspection before committing to this house fully.

[Anonymous]

The basement itself appears to be fine. The house has sat vacant for over two years with no utilites on at all. This caused some issues in the basement.

The siding was done less than a year before it was foreclosed on. And they obviously had no clue what they were doing.

I guess I need to look into the HUD program a little more. I'm not familiar with it..

[203bravo]

You are correct - there are some conditions with required home repairs that will not allow the loan to close.  If this is indeed the case with the property that you are looking at then a rehab loan would be your best option by allowing you to borrow the money to make the repairs after the loan closes.  However, you would not be able to then qualify for the 100$ down FHA loan.

[Blackhawks_girl30]

I just put an offer on a Hud home (Illinois), but it was not an accepted offer.  From what I learned is the listing price is the appraised value of the home.  Any amount over that list price that you offer you will need to bring that cash to the table and it can not be financed.  I am assuming the home would be in a status called insured escrow (only since you are saying it needs work).  There is an amount already set that you would need to put upfront.  Once you close you have so many days to complete the required repairs and then another inspection is done.  If you do not complete those repairs then they take that money and hire someone on their own.  If you do complete the repairs up to standard then the money would be released to you.  At least this is how it was explained to me when I put my offer in.  Hud does have a website, but I am not sure if I can post on here.  If you look up the home on the website it will tell you the exact repairs they are requiring for FHA financing.  Hope this helps =)