How To Tips:
Low Money Down
FHA foreclosures are different from any other type of foreclosure as there are several methods of buying a property utilizing low money down or no money down techniques. In order to fully understand these government programs that allow this to take place please read the following instructions.
First of all you must understand the difference in the
several ways in which the Federal Housing Administration lists the homes that they are selling.
IN = Insured
IN indicates a home that meets MPS (minimum property standards) currently and that the house in question is currently in livable condition. This house is not currently available with no money down but can be had with no money by applying these techniques.
Simply bid on the property using an FHA 203b mortgage as seen on the HUD contract and then have the property inspected. Be sure that you are with the inspector and that the inspector understands that you are interested in finding the deficiencies of the home. Be sure these deficiencies are included in the necessary MPS items to include structural, heating and plumbing. (paint and carpet will not be enough)
Send the home inspection along with your request to include the necessary funds into the price you are paying for the home. Repair funds requested must meet exactly the increase of the purchase price. This request must be performed by your real estate agent through an addendum. Be sure that the amount requested is less than $5500 and that it is approximately the 3% you were required to put down on the mortgage. There you are you got in for no money.
You could increase the amount of money received for repairs by applying for a 203k mortgage after the home has been inspected this raises the amount of funds received to a possible limit of 110% of the value of the home after repair.
IE = Insured with Escrow
IE indicates a home requires some degree of repair in order to meet MPS and that the house in question is currently not in livable condition. This house is currently available with no money down but can be had with no money by applying these techniques.
Simply bid on the property using an FHA 203b repair escrow mortgage as seen on the HUD contract and then have the property inspected. Be sure that you are with the inspector and that the inspector understands that you are interested in finding the deficiencies of the home. Be sure these deficiencies are included in the necessary MPS items to include structural, heating and plumbing. (paint and carpet will not be enough)
Send the home inspection along with your request to include the necessary funds into the price you are paying for the home. Repair funds requested must meet exactly the increase of the purchase price. This request must be performed by your real estate agent through an addendum. Be sure that the amount requested is less than $5500 and that it is approximately the 3% you were required to put down on the mortgage. There you are you got in for no money.
You could increase the amount of money received for repairs by applying for a 203k mortgage after the home has been inspected this raises the amount of funds received to a possible limit of 110% of the value of the home after repair.
UI = Uninsured
UI indicates a home requires repairs in order to meet FHA standard and that the house in question is currently not in livable condition. This house is currently available with low money down but can be had with no money. It is even possible to buy this house and make a substantial profit if you apply the following techniques.
Simply bid on the property using an FHA 203k repair mortgage as seen on the HUD contract and then have the property inspected. Be sure that you are with the inspector and that the inspector understands that you are interested in finding all of the deficiencies of the home. Be sure these deficiencies are included in the FHA minimums to include structural, heating and plumbing. (paint and carpet will not be enough)
The inspector will send the inspection to the lender along with the financial requirements to do all of the noted repairs. The inspectors assessment of the repair cost can be adjusted up or down in order for you to get enough money to complete the repairs. Be sure to allocate enough so that you can break even on the purchase and if you have any need for additional cash this is the time to do it by including a margin so that you can either add to your savings and or pay some additional debt off. The maximum mortgage allowed is 110% of the value of the property after repairs.
The bank generally frowns on this practice but if you act as the general contractor and work on the house yourself you can pay yourself for the work performed.
There you are you have either broken even when buying your home or in the best case scenario you have managed to make a substantial profit in the process of buying your new home.
