HUD Escrow Monies
On the HUD web sites is the escrow monies they list, such as $1254 for painting and floor repair, money in an account you will recieve at closing? Or additional amount they will take off at close or nothing? Also I noticed sometimes they say insured by escrow but then give no amount? Thanks for your time. :-?
This escrow figure is the amount estimated by HUD to bring the property up to FHA loan standards. If you decide to use FHA financing, the ($1,254 in your case) must be in escrow to be used after settlement for the repairs needed to bring the house up to FHA standards. An escrow is needed because HUD does not allow repairs to be make by the buyer before settlement. FHA insured without escrow means no work is required for FHA financing; the property often still needs work as I am sure you found out.
Thanks, so just a requirement for an FHA loan. I have noticed that many are very lowball est., possibly just for materials.
Another question, why would FHA be willing to make a loan on a failed HUD house in disrepair, under valued. Just govt. fun I guess. Thanks again 8-)
Many times the escrow estimates are so low that I am left wondering if FHA would be so forgiving if it were my house they were inspecting. I think the answer is that FHA trys to get the highest price possible for the house, and by allowing FHA financing they increase the number of potential buyers due to the low down payment and lenient credit requirements.