Written By: Catherine Hall, (the “203k Queen”) is the author and creator of the 203k in a box consultant certification and training system. She has owned and operated Value Home Inspections since 1993. She can be contacted through her site 203KinaBox.com. (Information provided in this article is not intended to be legal advice and is informational only.)
There are so many programs for homebuyers today that it seems that information about one of the best, most universally beneficially programs, has been drowned out in the din.
This is a HUD program that not only helps and rewards our hardworking community professionals (teachers, law enforcement officers, firefighters and EMT’s) but the communities that need these professionals the most.
The program is the Good Neighbor Next Door (GNND) Home Sale Incentive and believe it or not, it has been around since the mid 1990s!
The GNND is a program to provide a substantial incentive for eligible professionals to buy HUD owned homes in specific “Revitalization Areas”. It allows these deserving buyers the ability to buy these HUD single-family properties for half of the list price. That’s right! A 50% discount on any HUD home listed in specific areas in hundreds of cities around the country.
The purpose of providing these regionalized sales incentives is to promote revitalization through expanded homeownership opportunities. Thereby improving the health and stability of the communities in the most need. The revitalization areas are designated by HUD, based on household incomes, homeownership rates and FHA-insured foreclosure activity.
The buyers can use any type of financing: FHA, VA, Conventional and Cash. If the buyer is buying FHA, they are eligible for any and all additional FHA incentives that would be available for a non-GNND buyer. For example, if they are qualified for an FHA-insured mortgage they may be able to get the home with the $100 down payment program and have all closing costs financed as well. Also, any state or local homebuyer program incentives are also permitted along with the discounted purchase. No, I am not making this stuff up, really! Oh, and let’s not forget the $8000 tax credit that has been extended until April 2010.
The homeowner who is buying with the GNND program would get a “silent” second mortgage for the discounted amount – interest and payment free. This second mortgage stays active for a 36-month occupancy period; one of the few conditions of the loan, and an understandable one considering the purpose is to create a long-term improvement in the quality of life in these neighborhoods. The 3-year residency requirement begins following the end of the “move-in date”.
Based on the condition of the home, HUD establishes the “move-in date” of 30, 90 or 180 days. This is due to the fact that HUD is aware that many HUD homes require repairs prior to occupancy. As the homebuyer is getting the property for half of it’s value, these homes are ideally suited to the FHA 203(k) Rehabilitation Mortgage (see article, FHA 203(k) - The Process, The Players, The Possibilities). Needed repair costs escrowed in with the purchase price many times are still less than the list/appraisal price of the home. The FHA 203(k) loan allows a maximum of 6 months for completion of the repairs - tying in nicely with the “move-in date” allowance.
Here’s how it works:
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