What is a HUD REO with Repair Escrow?
How many ways does a HUD REO with Repair Escrow loan help you save money while financing and renovating a home?
- Foreclosure – HUD REO properties (aka: real-estate-owned or bank-owned) are mainly foreclosed homes returned to the market with certain cost advantages. Appraisers consider nearby foreclosures when they assess current market value. At the right time and place, this can lead to a good price on an undervalued house.
- Great way to pay for repairs – The HUD REO with Repair Escrow can be excellent protection on foreclosed homes. Foreclosed homes with necessary repairs of $5,000 or less can be considered for a HUD REO.
- Two loans rolled into one – In the past you would take out an extra loan to make these changes. By rolling funds for purchase and repair into a single loan, you can skip the doubling of processing fees and the higher interest rates common with short term lending.
HUD REO Properties
Each day, foreclosed houses fall into the hands of the federal government (Department of Housing and Urban Development) from its role as a home loan insurer. When the time comes, they resell these HUD/REO properties. An appraiser first checks the condition and assesses the property's current market value.
Sometimes these properties are in great shape. Other times they are not. When a home needs just a little work – $5,000 or less – the appraiser can check "insurable with a repair escrow." This means it can be sold, but only if the buyer opens an account to pay for renovations.
What can a repair escrow do for you?
A great way to pay for these renovations is with a HUD REO with Repair Escrow. A lender can roll the money for purchase and renovation into a single home loan. You can add up to 110% percent of repair costs to the balance. The repairs should be completed within 90 days of sale.
If this opportunity interests you, please contact PrimeLending to find a home loan expert who can show you how a repair escrow for HUD REO properties can be a good thing for you.