August 19

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Three Ways to Purchase Your Home with $100 Down or Less – Texas

By Leesa Sandoval

August 19, 2009

down payment assistance, hud reo, USDA

These days everyone is looking for a deal, especially with the amount of foreclosed homes on the market. I would like to take a moment to share with you a few programs that will allow you to purchase your home with $100 down or less.

Let’s begin by defining a HUD REO property:
This is a home that HUD has received ownership due to foreclosure. The home is put up for auction first to bidders that intend to occupy the property. If it is not sold in the first auction round the auction is opened to investors and non profits.

Note: Some HUD properties are not eligible for FHA insured loans unless a 203K loan is used. These homes will be listed as uninsurable.

1) Using HUD’s $100 Down program:

  • This is an incentive available for purchasers of HUD REOs on certain properties that have not sold.
  • The bidder can obtain a loan for $100 less than the final winning bid as long as the winning bid is not more than the list price (Appraised Value).
  • When the winning bid is higher, the winning bidder must pay the difference in cash.
    Let’s say the list price (appraised value) is $100,000 and the winning bidder bid $101,000 so that they could beat all the other bidders.
  • The maximum financing is $99,900 so the winner must pay $1,100 as the down payment.
  • You are still able to ask for 3% seller concessions from HUD but remember if you are bidding against someone not asking for concessions you may loose the bid as a result.

What is the $2,500 Closing Cost Incentive:

  • Some properties have a $2,500 closing cost incentive.
  • This incentive can be used in conjunction with the $100 down.
  • HUD does not pay the $2,500, they allow the borrower to finance it into their loan amount.

Notes about the HUD REO Contract:

The HUD REO sales contract will state:

  • if there is a repair escrow
  • if 203K financing is required
  • if the $100 down is applicable
  • if there is a $2,500 buyer closing cost incentive

2) What is the Good Neighbor Next Door program:

  • Open to Police Officers, Fire Fighters and Teachers.
  • The winning bidder must be working in the same general neighborhood as the home as one of the above Financing will be at 50% of the list price minus the down payment and the other 50% will be a soft second for 36 months.
  • Usually has $100 down payment associated with it.
  • Can finance all closing costs and prepaid items.

3) What is the USDA loan Program:

  • Offers 100% financing and the ability for the seller to pay all or a portion of closing costs.
  • Relaxed credit and asset requirements.
  • No mortgage insurance
  • Property must be in USDA eligible area.

It’s always best to be pre-approved before making an offer on any property.  And in the case of HUD REOs it is to your advantage to work with a realtor who is knowledgeable about bidding on these properties.

Contact me for more information

972-725-9110

Leesa Sandoval

About the author

• Leesa Sandoval
• 972.725.9110
I have been a Mortgage Loan Consultant in Dallas, TX for over 13 years, and I specialize in FHA 203k Rehab Mortgage Financing .....(Read Full Profile)

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