Tips for a Successful Closing of a HUD Owned Property!
Now that you are under contract for the purchase of a HUD owned property there are just a few additional items to consider. It’s important to address any and all issues upfront to ensure there are no closing delays. Hopefully you will find these items helpful!
1) Lead-Based Paint: If this is an FHA loan, and the property has tested positive for lead-based paint, the stabilization must be completed before the closing can occur. Please do not schedule closing until you have been notified that the property has been cleared to close! If this is a 203k loan, the work won’t be completed prior to closing, but the buyer will receive a credit at the closing. The lender will require that amount be rolled into the repair escrow.
2) Appraisal: If this is a loan transaction, please be sure that the lender has a copy of the appraisal (and if it is an FHA loan, a copy of the termite inspection report). If this is an FHA loan, and the appraisal is more than 150 days old, the lender will need to order a new appraisal (at the buyer’s expense).
3) Home Warranty: If the buyer wants a home warranty, please be sure that they have started this process. If the contract reflects a Line 5 credit from the Seller, this can be applied towards the cost of the home warranty.
4) Title Policy: If the buyer wants to purchase a title policy (or if the buyer’s lender is requiring a title policy), and you have not yet ordered title, please do so immediately. You may order a title policy from any title underwriter, or you may contact the closing agent who can assist you with ordering title. If the contract reflects a Line 5 credit from the Seller, this can be applied towards the cost of the title policy.
5) HOA: If the property is in an HOA, the closing agent will order a resale certificate. Some of the HOA’s are slow in turning this around, so the closing agents try to order this as soon as possible. However, they can’t order it to early, because it can’t be outdated at closing. Since you are mid-way through the contract cycle, you may want to confirm with the closing agent that they have ordered the resale certificate.
HUD homes are great on so many levels. Knowing these tips can make for a smooth and pleasant closing. Please let me know if I can do anything else to help.