Question Details

Cbalcome, Other/Just Looking in Elgin, IL

Made an aggressive offer on HUD home. Waiting for bids to be viewed on Monday

Asked by Cbalcome, Elgin, IL Sat Nov 29, 2008

We made an aggressive bid on a 2002 HUD home. The homes tax assessment is 140,000, and the list price is 103,000. All appliances have been stripped from the house and the flooring needs to be replaced. Other than that the house is one of the best we've seen. We made an offer of 95,000 with a 3% seller concession. The house qualifies for a 203 Streamline loan. I don't have a lot of money to put down and am worried about how I will be able to finance the 3% down that FHA requires, and the additional closing costs that the seller is not paying. I seen online that FHA offers a $100 down payment program. That would help tremendously. Is this program still available in Minnesota? I can afford the 3% down payment, but having to pay the additional closing costs that the seller 3% will not cover, is going to strap me. I am 21 years old and do not want to enter this mortgage with my savings drained. What do you suggest.

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HUD will pay up to 5% of the sale price toward your closing costs, but you have to specify that closing cost assistance at the time you make the offer. You asked for 3% in closing costs ... if you are short of funds, why didn't you ask for more? The amount of the closing cost assistance is deducted from the net sales price when bids are compared.

HUD also requires a good loan prequalification letter from a lender that includes the property address in the letter. There is an assumption that this lender has given you a list of your closing costs and that number is one that works for you.

There are limits on the $100 down payment program ... it may not apply to the property you are trying to buy. You should be clear about this with your real estate agent BEFORE you submit an offer.

I suggest that you sit down with your real estate agent and lender ASAP and be clear about all of the monies that are involved in this transaction, and be clear about inspections and all of the steps necessary to get you to the settlement table.

I wrote a consumer book, "HUD Homes for Sale - A Complete Buyer's Guide." (All proceeds from the sale of this book are donated to CARE for humanitarian relief.
0 votes Thank Flag Link Mon Dec 1, 2008
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