Answers (9)
- Andrew Adams, "RenovationSpecialist"
- Contributions:9406
Gary,
That only works with weather related repairs..exterior painting in in sub freezing conditions...roof with a foot of snow on it. FHA will not allow you to escrow for repairs out of convenience and truthfully it rarely will be allowed on a conventional loan. So although it may sound good on paper it is not reality!
That only works with weather related repairs..exterior painting in in sub freezing conditions...roof with a foot of snow on it. FHA will not allow you to escrow for repairs out of convenience and truthfully it rarely will be allowed on a conventional loan. So although it may sound good on paper it is not reality!
- NeedinFHA
- Contributions:144
Depends on what the upgrades are? Are these actual upgrades or actual repairs? My roof was a no go, they sent them a contract saying they'd do repairs and warranty work and FHA lenders said no that the work had to be done before loan was approved.
It is only 2k, so why doesn't the seller just drop 2k off the price and call it even?
It is only 2k, so why doesn't the seller just drop 2k off the price and call it even?
- Gary Kinberg, "Gary Kinberg"
- Contributions:229
The seller can escrow funds for repairs for after closing and this is co-ordinated with the lending underwriter and the title compnay. A cushion over the repairs amount will be required and payment to the contractor will be from the title company. I think any left over money goes to the seller and any extra money will be your obligation. I believe this works for FHA and conventional loans and has not changed with the new guidelines. Cash back on a purchase is not allowed and with FHA loans you can get back money you spent out of your pocket, at the underwriters and funding departments discretion.
- Andrew Adams, "RenovationSpecialist"
- Contributions:9406
Barbara,
Your options are flawed...
1. Is fine
2. Depending on the repairs..want to have vs. need to have, lender will likely require the repairs be made prior to closing (Unless the borrower gets a renovation loan).
3. Finance more to pay less monthly so you can have better cash flow....if the repairs need to be made what good will a reduced mortgage payment of $50 do to get those repairs taken care off?
Suggestion 2 & 3 are "treadmill" suggestions...They may create some extra leg work for either the borrower or the loan officer only to realize you haven't gone anywhere!
Your options are flawed...
1. Is fine
2. Depending on the repairs..want to have vs. need to have, lender will likely require the repairs be made prior to closing (Unless the borrower gets a renovation loan).
3. Finance more to pay less monthly so you can have better cash flow....if the repairs need to be made what good will a reduced mortgage payment of $50 do to get those repairs taken care off?
Suggestion 2 & 3 are "treadmill" suggestions...They may create some extra leg work for either the borrower or the loan officer only to realize you haven't gone anywhere!
- Barbara Q.
- Contributions:49
It's kind of like the shell game...where's the money now?
What's the purchase price?
What's the cost of repairs?
1.)The best option is to have the repairs done prior to closing.
2.) Another option is to contract to have the work done and have the Seller pay the contractor in advance. (Be sure the contractor is reputable and your name is on the agreement... and perhaps the contractor will allow you to hold a portion of the money 'til the work is complete.)
3.) If the Seller is allready paying your closing costs...
You can ask the Seller to pay discount points at closing (included as closing costs: up to 6% allowed). The discount points can be used to Buydown your Rate & payments for the first 2 years...so that you can afford to make the repairs while your payments are discounted. (Temporary Buydown) Calculate rate & payments: http://www.321advantage.com/buyers-calculate-your-rate
Good Luck with your purchase!
What's the purchase price?
What's the cost of repairs?
1.)The best option is to have the repairs done prior to closing.
2.) Another option is to contract to have the work done and have the Seller pay the contractor in advance. (Be sure the contractor is reputable and your name is on the agreement... and perhaps the contractor will allow you to hold a portion of the money 'til the work is complete.)
3.) If the Seller is allready paying your closing costs...
You can ask the Seller to pay discount points at closing (included as closing costs: up to 6% allowed). The discount points can be used to Buydown your Rate & payments for the first 2 years...so that you can afford to make the repairs while your payments are discounted. (Temporary Buydown) Calculate rate & payments: http://www.321advantage.com/buyers-calculate-your-rate
Good Luck with your purchase!
- Loan Officer, "MarylandMortgages"
- Contributions:2097
If the money is toward repairs, have them do the repairs.........that will not affect the sales price or seller concessions.....but, it can not be cash to you. They will need to do the repairs.
- Loan Officer, "MarylandMortgages"
- Contributions:2097
It will be limited to 6% seller help towards the closing costs and prepaids. Anything more will be used towards a reduction of the sales price.
2% allowance to upgrades will result in a reduction of sales price.
2% allowance to upgrades will result in a reduction of sales price.
- NeedinFHA
- Contributions:144
Could they do these upgrades/fixes before you close? After my second appraisal they said they didn't like my roof, my seller went and put a brand new roof with warranty on it in 1 day and I was able to close....Just a thought.
- Rodil San Mateo, "Rodil San Mateo"
- Contributions:3
FHA allows the seller to pay up to 6% of the sales price toward the buyer's closing costs but not as cash back to the buyer or for a down payment.
You might want to check if you can use a FHA 203k rehab loan. This would allow you to get a mortgage larger than the sales price and use the extra funds for repairs. The home would have to appraise for the higher loan amount (based on its value after the repairs). Here are two HUD links that describe the program:
Rehab a Home w/HUD's 203(k)
Funds for Handyman-Specials and Fixer-Uppers
Good luck!
You might want to check if you can use a FHA 203k rehab loan. This would allow you to get a mortgage larger than the sales price and use the extra funds for repairs. The home would have to appraise for the higher loan amount (based on its value after the repairs). Here are two HUD links that describe the program:
Rehab a Home w/HUD's 203(k)
Funds for Handyman-Specials and Fixer-Uppers
Good luck!
Can Seller pay Buyer cash toward upgrade/or repairs at closing on FHA?
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