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Arrowhead Escrow Blog▣ 3 Things You Should Know About Repair Escrows0 Comments added to this post What you need to know about buying a HUD Home that has a repair escrow! 3 Things You Need to Know About Repair Escrows1. Repair Escrow - What is it
When looking for a HUD Home with your realtor and you see a home that is listed with "repair escrow", this means that HUD will sell the home "AS IS" but will allow the purchaser to finance the repairs in their new FHA mortgage. When you see "repair escrow" there is always a dollar amount that goes with it, this dollar amount will be added to your new FHA mortgage. In some cases you can pay for the repairs at closing instead of financing them into your new mortgage. But if your goal is to get into a home with a very small down payment the repair escrow is the best way to go!
2. Example of a Repair Esrow
You offered $100,000.00 for the house with FHA financing with $100 down, it had a "repair escrow" in the amount of $3,500.00. Your BASE loan amount would be $103,400.00, then the MIP (mortgage insurance premium) will be added to your base loan amount. The Lender holds the $3,500.00 in a special escrow account until they verify the repairs have been completed, then the money will be released. The Lender can charge a $200.00 fee for facilitating the repair escrow, that the seller will pay at closing.
3. Lenders Who Do Repair Escrows
You need to work with a lender who regulary uses repair escrows and understands the process. Working with a company who is not experienced in repair escrows will only cost you time and money. In our experience we have only found a handfull of lenders who are experienced in this type of loan. Here a few that know the process:
Check back later to get the inside scoop on what HUD will and will not pay for on your closing cost.
-- Arrowhead Escrow last edited on February 22nd, 2010 at 2:01 PM |
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