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I see a house listing with a HUD number and a repair escrow in the amount of about $2K. What does this mean? Does it mean that the previous owner had the house through an FHA 203K loan? That repair escrow is still attached to the house and can be used to upgrade the house or what?
What if I do not have a lender? What if this will be a cash purchase?
If it's cash, then you just offer what you want to offer. The escrow is to do repairs so an FHA lender will allow the sale. Cash doesn't have such stipulations. It's all net number to them, so subtract it out.
I see. So the $2K noted would not even matter to me if I paid cash for the house? I don't get what the description is saying; does it mean that if I do go through the HUD process since it's a HUD home, I must have the $2K available to make repairs with or what? Is that what it all means? Or it means that if I do go through the HUD process, the $2K escrow is available for me to use to make repairs to the house?
I see. So the $2K noted would not even matter to me if I paid cash for the house? I don't get what the description is saying; does it mean that if I do go through the HUD process since it's a HUD home, I must have the $2K available to make repairs with or what? Is that what it all means? Or it means that if I do go through the HUD process, the $2K escrow is available for me to use to make repairs to the house?
When someone is getting an FHA loan, there are certain things that must be done to the house for lending purposes. FHA does not allow safety hazards, pealing paint, or mechanical issues. HUD is saying that there is some issue(s) that they are willing to escrow $2000 for a buyer to get repaired after closing so the FHA lender will allow the loan. They don't want to make repairs, but are offering the money to do it.
Even if I'm paying cash for the house, do I still get the escrow funds? Is this free money to make repairs or do I have to pay it back?
Quote:
Originally Posted by FalconheadWest
When someone is getting an FHA loan, there are certain things that must be done to the house for lending purposes. FHA does not allow safety hazards, pealing paint, or mechanical issues. HUD is saying that there is some issue(s) that they are willing to escrow $2000 for a buyer to get repaired after closing so the FHA lender will allow the loan. They don't want to make repairs, but are offering the money to do it.
Even if I'm paying cash for the house, do I still get the escrow funds? Is this free money to make repairs or do I have to pay it back?
It's not free money, lets say they are asking for $100k with the 2k credit in escow, you can just offer $98k or less and then the escrow money won't be involved in the deal.
It is used so a buyer can finance some of the repairs. Basically, a buyer can increase their loan amount to $2K over the purchase price. The overage is to be used for repairs.
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