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Can you change your financing once you have an accepted bid on a HUD home in Sacramento?

The answer is YES... BUT there are some things you will need to know.

I have a client that is in escrow on a HUD home in Elk Grove. She initially thought she would take advantage of FHA financing... But later changed her mind and decided to put more money down instead.

Can you change your financing once your bid is accepted? The answer is YES... You absolutely have an option to change your financing mid-stream! There are some additional fees involved with this change you should be aware of.

Although on a bid level... Selecting FHA financing does not give you an advantage. There are benefits to choosing FHA as your financing component.

If you decide to change to a non- FHA financing on a HUD Home in Sacramento... You should be prepared to pick up some additional costs. Here are the additional costs involved when buying a HUD Home if you use conventional financing or pay cash: 

You should be prepared to...

• Pay for an appraisal!
  There is a FHA appraisal completed prior to any HUD Home going on the market.  If the buyer is using FHA ( 203(b), 203(b) with an escrow, or 203k ) they can use that appraisal for FREE to obtain their mortgage. This can save buyers over $400 in appraisal inspection fees!
  
  If you decide to use conventional financing, be prepared to purchase a new appraisal.  With HVCC guidelines many lenders will not accept an appraisal from someone out of their "network". I would plan to pay for an additional appraisal upfront if using conventional financing.
  
  One more note....Appraisals are only good for a couple months. So if you are writing an offer on a HUD Home that has been on the market for several months... You may need to purchase a new appraisal regardless of your financing options.
  
  
• Pay for the pest report and clearance!
  Every HUD Home comes with a completed pest report and many times a clearance depending on the condition of the home. A clearance means that items identified in the report has been repaired and/or remedied. FHA buyers don't need to pay for this inspection or the clearance.  If you elect to use conventional financing or pay cash...  You will be responsible for the total out of pocket cost to HUD. So any inspection fees and the cost to repair the items will be your responsibility.
  
  
• Lead based paint inspections and mold inspections!
  Depending on the age and/or condition of the home various inspections may be required prior to the home going on the market. Non- FHA buyers will be required to cover these costs.
  
  
• Pay for your per day extension if you don't close in time.
  If your escrow does not close by the specified close date, the buyer will be charged $25 a day until they close. FHA buyers get their first extension for free. All other buyers will have to pay this per day penalty until they close.
  

So.... The answer is YES you can change financing during a escrow on a HUD Home! BUT you really need to look at the total cost involved with your decision. What might not seem like a big deal to you... Can hit you in the pocket book if you are not careful!

I hope you found this information about HUD Homes in Sacramento interesting! Please give me a call at (916) 548-9198!  I am here to help you to get into a HUD Home this year!