There are three categories of properties that are sold by HUD as foreclosures.

They are:

1) Insurable Listings (IN):

An Insurable Listing (IN) generally does not need any repairs.

2) Insurable Escrow Listings (IE):

An Insurable Escrow Listing (IE) needs minor work (under $5,500). These funds will be financed in set aside in an escrow account for you to complete the repairs after your purchase.

3) Uninsurable Listings (UI):

An Uninsurable Listing (UI) will need repairs greater than $5,500. These homes are only eligible for FHA 203K (Rehab) financing. The cost of the repairs will be included in your mortgage.

When bidding on a HUD home always remember this.  If your bid is more than the asking price you will be asked to pay the difference in cash.

Example:

If HUD is asking for $100,000 and you bid $105,000, you will be required to invest at least the minimum 3.5% as a down payment PLUS the additional $5,000.

The above is not a requirement when you choose an FHA 203K loan as your financing option. Every HUD listing is eligible for this type of financing no matter what category they are in. If the home does not need repairs the money can be used for upgrades, energy improvement, and appliances.

In short, if you plan to bid more than HUD’s asking price an FHA 203K loan may be your best option!

I’ve helped thousands achieve their dream of home ownership in my 20 year career. Call or email me anytime!

Mark Robinson

732-207-8434

mark@njfhapro.com