$100 Down Payment Program offered by HUD

This lovely Lawrenceville home was offered at only $115,000 by HUD

In this article I will be explaining the $100 down payment program offered by HUD for Owner Occupants to purchase a home.

A HUD home is a 1 to 4 unit residential property acquired by HUD as a result of a foreclosure action on an FHA-insured mortgage. HUD becomes the property owner and offers it for sale to recover the loss on the foreclosure claim.
HUD Homes are initially offered to owner-occupant purchasers (people who are buying the home as their primary residence). Following the priority period for owner occupants, unsold properties are available to all buyers, including investors.
If you are an evacuee displaced by Hurricane Katrina, Rita or Wilma, HUD could sell a HUD home at a discount to you. (I will be writing another article on that soon!)

All properties available for purchase will be listed on http://www.bidselect.com/  This is a contrator hired by HUD to manage their lsitings.  You cannot buy the properties directly from HUD, Bidselect, or the contractor that is used in Georgia to process the paper work (PEMCO).  If you ae interested in purchasing a HUD home you must contact a HUD approved Real Estate Broker.  The Brokers working with HUD properties must go through an annual renewal process and they are (should be) familiar with the HUD bidding process, which is much different than that of general sales and working with other agents.  Also HUD uses its own key for agents to enter their properties and the HUD owned homes are not on any lockbox for you to enter on your own, or for any agents that are not HUD approved to use via the agent SUPRA lockbox.

The $100 Down payment Program
I love this program.  After congress did away with most of the down payment assistance programs last year, it left a gaping hole in the market.  Many people wanted to purchase a home, however coming up with the 3.5% down payment requirement dashed a lot of the dreams of the first time home buyers.  Many buyers can afford to maintain the monthly payments, however saving a lump sum of money proved difficult for many.  Thus the HUD $100 down program became much more attractive.

Basically if you are going to live in the home, HUD will allow you to close with a $100 down payment.  Once your successful bid is acknowledged by HUD (accepted), then your Broker will fill in $100 where the contract asks for the down payment amount.  HUD will still expect you to pay them the earnest money amont which is $500 for homes less than $49,000 and $1000 earnest money for homes more than $50,000.   Your loan amount will basically be almost 100%.  This is allowable by HUD and most banks will allow this type of financing when you are purchasing a HUD home.  But I suggest making sure your lender is aware that you are looking at HUD homes and intend on buying one.  The last thing that you want is an ugly surprise at the closing table, because believe it or not, although allowable by HUD, some lenders will not fund on a 100% financed home.

Another nice buyer bonus is that HUD will also give you a $1,000 buyer bonus at the closing table if you are going to be an owner occupant and if this it the first time the home has been listed by HUD and if your bid is won within the first 30days of the listing.  You can use this toward additional closing costs or it could mean you get some cash back at the closing table.  You will have to get with your lender to see how these funds can & will be applied.

Many times when buyers think of HUD homes, they get an image of an old beat up run down fixer upper.  Well let me tell you that is most certainly not always the case.  Now HUD does have many homes in it's website that are not FHA insurable (meaning the repairs will cost more than $5,000 to make it pass an FHA inspection for FHA financing), but please know that due to the economy and the flood of foreclosed homes coming on the market, HUD has some fabulous properties!  Newer and move in ready!  There are really some jewels!  They list properties typically on Wednesdays & Fridays.. and the bidding time varies.  It can be anywhere from a few days to a few weeks.

I suggest placing your bid on a home as soon as you know that you want it (of course after you have had the opportunity to walk through and asses the property).  Hud will take the highest & best bid, and in the case of a tie.. whoever bid first will typically win.  They are about business and impartial when it comes to these things.  So do not take it personal if you do not win the bid on the home you want.. just keep looking and bid on something else, and hey you never know, sometimes if the original buyer does not complete the purchase, HUD will place the home back on the market and notify your HUD broker that it is available again!

I encourage you to get an inspection after your offer is accepted. All HUD Homes are sold AS-IS, without warranty. HUD will not make repairs nor pay to correct any problems.  As a courtesy HUD will provide you their property inspection report done by their contractor.  It is a basic report to notify HUD about the general condition of the property as well as it helps HUD catagorize and price the property including figuring possible escrow repair costs.  HUD will not turn on the utilities for you.  You will have to contact all utility companies and get the utilities turned on in your own name for the inspections.  Yes, unfortunately that means you will have to pay any required deposits for this as well.  Please note, if you are purchasing a home during the winter months you will have to pay a de-winterization fee.  Typically $150 directly to HUD.  In the de-winterization process they pay a contractor to safely and securely drain the water from the home and shut off all utilites so that the home does not suffer any damage from being vacant.

If you elect not to get an inspection done on your home I strongly suggest getting a home warranty at closing.  These cost any where from $300 to $500 depending upon the coverage and the trip visit amount in case you have a problem.  But at least this will cover you in case of any major issues after you close.

Last but not least.. financing!  You must get an FHA loan to qualify for the program mentioned above.  You do not need FHA financing to purchase a HUD home, only if you want to take advantage of the $100 program!  I will be giving you more detailed information about FHA loans in a future article!
Thanks for reading!

HUD Home of The Day Only $100 Down Payment

Listing Bid at $98,000

This beautiful home is currently available in Henry County.  It was built in 2007 and has 5 bedrooms and 3 full baths.   What a great opportunity to move into a nice home. 

Homes listed by HUD have a Bidding period.  Basically meaning that they list the home on a certain date and then give prospective buyers any where from a few days to a few weeks to place a bid on the home.  You (via your HUD approved Real Estate agent) can bid any amount that you like however HUD is not obligated to accept the BID.  If you BID on a home that is a NEW listing for HUD and your BID is "acknowledged" meaning accepted by HUD you can receive a $1,000 bonus at closing if you plan on being an owner occupant. 

Once the Bidding has ended HUD will choose the highest and best bid.  Clients have asked me "what if my bid amount is the same as another buyer?"  HUD will typically resolve this issue by awarding the bid to whomever placed their bid first.  So even though the bidding period may end at a certain time & date.. you feel "what's the rush".. my suggestion would be to get your bid in as soon as you want the property, because you could lose it just because someone else placed their bid before yours!

Police Officers, Firefighters, Teachers can get up to 50% off a HUD home!

The Good Neighbor Next Door Program

Law enforcement officers, pre-Kindergarten through 12th grade teachers and firefighters/emergency medical technicians can contribute to community revitalization while becoming homeowners through HUD's Good Neighbor Next Door Sales Program. HUD offers a substantial incentive in the form of a discount of 50% from the list price of the home. In return you must commit to live in the property for 36 months as your sole residence.


How the Program Works

Eligible Single Family homes located in revitalization areas are listed exclusively for sales through the Good Neighbor Next Door Sales program. Properties are available for purchase through the program for five days.  You will have to check with your real estate agent

How to Participate in Good Neighbor Next Door

Check the listings for your state  you can go to http://www.bidselect.com/.  On Bidselect put in the state you are looking in, scroll to the bottom of the seach page and look for the Government Foreclosure Programs tab.  Then click on Good Neighbor Next Door.  This will populate all the homes available for this program in your State.  You will be surprised to see homes listed at $1.00    Yep, that is RIGHT!!  Only $1.00   Your agent must submitt a Bid for you anyway and remember there could be other buyers bidding so you are not guaranteed to win the $1.00 Bid, however HUD is basically stating the if you BID $1.00 and not one else bids.. hey the home will be yours!  Not a Bad deal!   Now if more than one person submits a BID on a single home, a selection will be made by random lottery (typically if the Bid amounts are the same.. if one bid is higher.. the highest & best will win). You must meet the requirements for a law enforcement officer, teacher, firefighter or emergency medical technician and comply with HUD's regulations for the program.  Hud has specific forms that you must sign verifying your status and you must plan on living in this home for at least 36 months, which is only 3 years... not bad!

HUD requires that you sign a second mortgage and note for the discount amount. No interest or payments are required on this "silent second" provided that you fulfill the three-year occupancy requirement.

The number of properties available is limited and the list of available properties changes weekly.

Gwinnett County Homestretch program gives you $7,500 at closing!

This Lawrenceville Home is HUD owned and only $129,000 it is almost brand new!

The Homestretch Program is one of many Gwinnett County Programs that you can use to purchase a home!  In this article I will explain the program and the process  to you!

First things first, you will have to get a prequalification with a lender of your choice.  Just make sure to ask your lender if they will participate in the Homestretch Program.  This program does not have preferred lenders, however it is best to check with the lender, especially if they are a Mortgage Broker, as some investors that the mortgage brokers use will not allow them to fund loans using some of these down payment assistance programs.

With your lenders blessing you will need to schedule an appointment to meet with one of the counselors at the Homestretch program itself.  They will go over the program and the application with you.  You will need to bring all documents that are required as it is similar to applying for loan.  They have income guidelines that they go by and will make sure that your income does not exceed their requirements depending on how many dependents you have and the total people living in your home.

Once this is complete and they have approved your application, you will be able to search for your home.  Now the great thing about Gwinnett County Homestretch Program is that you can use the $7,500 toward a Single family home or a Townhome.   Once you locate your desired home and you have successfully received an executed contract, you will need to submitt the contract to the Gwinnett County Homestretch program.  They will then secure your funds.  This is very important as sometimes this program runs out of funds.  The funds typically will be replenished however there is no particular timeline on the availability and they will not and cannot guarantee the funds will be available to meet your contract close date.
So make sure you turn your contract into the program ASAP to get your money.  The $7,500 can be used toward down payment, closing costs and pre-paid escrow items.   You will however have to contribute 1% or a maximun of $1,000 of your own funds towards the transaction and you will not be able to receive any cash back at the closing table.
Now the next issue is the inspection.  The Homestretch program requires you to obtain a home inspection at your own cost, prior to them sending our their Gwinnett County inspector.  They do have a list of guidelines that they look for in the home inspection and they will happily provide you a copy of their expectations at the time of your application.   A fixer upper home will not work for this particular program , unless you have all of your renovations completed before their inspector comes out to view.
Once your loan is 100% complete and underwritten approved from your lender, and your home has passed inspection & appriasal, then your file should be submitted to the Homestretch Program for review as well.  You can expect that process to take at least a week.  Be prepared for the fact that sometimes the Homestretch program will notify your lender that they have additional questions or that they may have other loan conditions that must be met.  If this occurs it will take afew more days for your lender to clear those additional conditions to get your loan approved.   Once your loan is approved by the program, your file goes back to your lender and they will be required to draw up a closing package to submitt to the closing attorney.

Once the closing attorney receives your loan package they will produce a HUD-1.  This is improtant, as it must go back to Homestretch for review in order for them to release your funds for closing.  A member of the Homestretch team will actually attend your closing to bring the check for $7,500 and to make sure their title requirements are met.

The Homestretch program, along with the other county programs require that you live in your home at least 5 years or you will have to pay them back the $7,500 at closing if it is prior to your 5 year anniversary of owning the property.

This program is a little more work, however it is well worth it if it is the difference between owning a home of your own or staying in that apartment!

If you need help and are in the metro Atlanta area please contact me, I would be happy to help!

All About the Dekalb County Down Payment Assistance Program $5,000 & $8,000

This Dekalb County home was listed at only $83,000.  Yep!  That's right!!! a 5 bedroom 3 bathroom home!!

And you could have bought it and received $5,000 to $8,000 from Dekalb county to make the purchase!  Dekalb County has a first time home buyer program that  will give you money to use toward the down payment of a home in Dekalb county only.  Now there are some guidelines, but that is what I am here for!  to walk you through the process so that you understand the requirements, are aware of what to expect and hopefully you will have a smooth transaction!

You can use the money toward your Down Payment, Closing Costs, or other pre-paid expenses.  If you begin the process and your credit score is below a 620, however with utilizing the counseling available, you raise your score over the 620 mark, then Dekalb county will increase your amount from $5,000 to $8,000!!  Now, keep in mind, this money will act as what is considered a "soft second mortgage" on your title.  You will have to live in your home for at least 5 years in order for that "soft second" to be released from your title.  Now you can move sooner if you have to, but please keep in mind that upon closing Dekalb county will expect their money back.

Now, moving on to the program.  There are income guidelines for the program and the home price can not be over $160,000.  The maximun annual income limits are $39,850 for a household of one and it goes up incrementally the more people in your home you have. 

You are eligible if you have not purchased a home in the last 3 years, and the home must be located in the county limits.  You will have to participate in a home ownership pre-purchase counseling, and the home you select must be single family.  Sorry, no townhomes nor condominiums ( basically due to HOA issues).  The home you select must also pass the Dekalb County home inspection, and let me tell you from experience... the home cannot be a fixer upper.  the dekalb County inspector is very meticulous and they will look at wobbly toilet seats and drain stoppers!  So the home must pass their muster!

1. Get a prequalification from a preferred lender.  Now I say preferred because they have a list of approved lenders.  this basically means that the lender has taken the class they offer to become familiar with the program expectations and how they can utilize the program.  This is very important.  Many lenders will tell you there is no money available to you simply because they do not want to be bothered with the additional work required to process your loan utilizing the program.  Keep in mind that there is double processing on as the lender will take your loan application , process your loan and after they are 100% done with your  file they have to send the entire package to Dekalb County for another underwriter to review it to make sure it qualifies for their funds.  This can honestly take some time.  they are meticulous and everything must be right or you can expect delays for sure!

2. Take the Required Homebuyer Education Seminar and then meet personally with a housing counselor for an individual counseling session.  This must be a counseling agency approved by Dekalb County.  The topics covered will be *how to get a mortgage *money for down payment * planning for home ownership responsibilites *evaluating your ability to afford a home * types of financing available * budgeting and credit * understanding your FICO score *avoiding foreclosure.

3. Search for your Home!  Once you have received a prequalification from a lender and you have completed your homebuyer education class and individual counseling session, you are ready to find your home!  You have many choices to make as there are many great deals to be had in the Dekalb County area!  Just keep in mind that it must be single family and priced under $160,000.   You can also choose a HUD home!  Be aware that some sellers may have had bad experiences with the down payment assistance programs and may not want to allow you to use them.  This typically occurs when the agent and lender are not familiar with the program, or the buyer enters into a contract PRIOR to applying for the program and meeting the program requirements.  I would also ask that the lender you are working with begin to process your loan application as soon as possible to avoid delays.

4. Upon contract acceptance, please make sure that the Dekalb County "Non Displacement Agreement" is a part of the contract paperwork.  Dekalb county must have this original form or they will not process your application.  You should immediately schedule your inspection.  You have to have your inspector come out BEFORE the Dekalb County inspector.  So basically your home will go through two inspection processes.  Let me tell  you, if the home is not right, they will not give you the funds.  The inspector will expect the home to have all utlities on and they will give you a list of items that need to be done in order for the home to pass the inspection.  You will have to have the items completed, if the seller will not before Dekalb County will come back out to make sure the items are done and give your home a "pass".  They will not release your down payment money until the home has passed inpection.

5. Your contribution - Buyers must have at least 1% of their own money in the transaction.  this requirement is typically fulfilled when you give your earnest money and pay for your appraisal.

Well once you make it through these steps congratulations!! You should be heading to the closing table!!  and if you are searching for a home in the Dekalb County area feel free to contact me, I would be happy to help you!

All things related to buying a home!

If you are looking for a home in the metro Atlanta area, you have many options. I am dedicating this blog to helping yo navigate your way through all of the information & misinformation out there regarding financing, credit, down payment assistance, HUD home purchase, home buyer education classes and many other issues and topics when it comes to getting into your home for as little money as possible.

I will also be addressing many issues regarding keeping the home you are in, including credit counseling, loan modifications, and if all else is not working.. what a short sale entails.

Well, there is a lot to talk about so lets get started!!