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Ray's Blog

By Ray | Mortgage Broker
or Lender in Denver, CO

5 Important things for buyers to know when bidding on a HUD home in Colorado

So if you are bidding on a HUD home in Colorado, looking to use FHA financing (non-203K, different because), here are some often overlooked but important things that can impact you , if your lender is not familiar with HUD homes.

1) To qualify for the $100 FHA incentive program you must bid AT LEAST the list price. If you under bid and are awarded the contract, you will have to put 3.5% (minimum) down.

2) If #1 happens, you are unable to finance (customary on FHA 30 year mortgages) the 1.75% Upfront Mortgage Insurance Premium, if adding it to the loan makes the home exceed 100% of the HUD appraised value amount.

3) If you are unable to add in seller paid closing costs, how will you pay for closing costs? Do you have money set aside? One fee in particular is the owners title policy and is customarily paid by the seller in Colorado, UNLESS, you buy a HUD home. Then that fee is on you as the buyer and runs about $750 with HUD homes.

4) Are you buying a home with an HOA? If so, make sure that the HOA status letter is available and ready prior to closing. We have had loan documents at title and buyers getting cashier checks for funds to close, and been told by the title company that they don't have a status letter and so the closing has to be rescheduled.

5) The contract is 45 days (calendar), but to your lender that is about 30 (20 business days) becauwe the title company typically requires your loan documents 6-8 business days in advance of closing in order to schedule your closing on their calendar. So in other words be ready to jump to quick action for your lender or you may have to extend the contract ($$ cost).

Make sure your lender is as versed as you are, and prepared to get you to the closing table in a timely fashion. We have implemented successful strategies to deal with HUD REO contracts and ensure that your closing happens on time, every time.

To apply online for an FHA or HUD home loan check our site out, and feel free to fill in a secure online application.


Ray Williams
Branch Manager
Summit Mortgage - Denver
303-779-0591 x101
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