What to Expect – HUD Edition, Starkville, MS
While this post is directed towards Arizona Buyers, most of it does apply to Mississippi Buyers. ESPECIALLY #10) Change locks – Even if a Seller assures you that ALL keys are accounted for, why would you even take the chance. REKEY!!
Congratulations! Your bid to purchase a HUD home was accepted! Now what?
Your realtor will immediately write up a HUD contract and arrange for you to sign in-person and provide instructions for you to obtain a certified check for earnest money made payable to “HUD or Buyers Name” and notating address of property you are purchasing. You will also be required to obtain a $100 certified check payable to CWIS, LLC (also notating purchase address) for temporary turn-on of utilities for inspection purposes. Bring both checks to signing appointment. HUD does not accept electronic signatures. Be sure to have a blue ink pen on hand just in case your realtor does not have one. HUD requires your “wet” signature in blue ink only. Once signed, your realtor will overnight your Purchase Contract package to BLB Resources for receipt within two days of bid acceptance.
Within a week, you will be notified whether or not contract has been ratified. If contract has been accepted, your realtor/HUD will forward copies of fully executed contract to Title, your Loan Officer, and you. You will also receive a Utility Authorization Form from CWIS.
You will need to:
1) Call appropriate utility companies and schedule temporary turn-on of all utilities for inspection purposes. Use dates provided on Utility Authorization Form.
2) Schedule your home inspection. If financing FHA, no need to order a termite inspection as HUD does this automatically. In Arizona, this must be done within first 10 days of contract acceptance. HUD does not provide Seller Property Disclosure Statements (SPDS) or CLUE (Insurance History) reports. They do, however, provide a Property Conditions Report which your realtor should have given you a copy of prior to your placing a bid on the property. Repair Escrow (amount of money required to make repairs – not to exceed $5000) is on the Property Conditions Report. Be sure to be there towards the end of the inspection so you may talk to inspector about findings. Of course, you may waive your right to an inspection, but I wouldn’t recommend it.
If other major repairs not mentioned on Property Conditions Report are required, it may be necessary to obtain a licensed professional’s estimate of repair and have your realtor file a Change of Financing (form found on BLBResources.com) to increase your Repair Escrow amount (not to exceed $5000). Submit Change of Financing and estimate of repair to BLB Resources for approval.
3) HUD does not make repairs nor do they use Buyers Inspection Notice Sellers Response (BINSR).
4) During the same time inspection period is going on, your lender will be processing paperwork, and will most likely need to gather more documents from you in order to submit the file to their underwriter. It’s important to obtain and submit these documents as soon as you can so that the lender has enough time to process things prior to closing. Most delays in today’s closings happen because the lender needs more documentation or time to push the file through. Be proactive!
5) Obtain homeowner’s insurance on the property being purchased.
6) If you will be purchasing a home warranty, it’s time to get this ordered.
7) Once you get closer to the date of closing, you’ll need to line up the utilities into your name: Water, Garbage, Gas, Electric, Cable, etc. Have them set up the utilities in your name for the day of closing–but not before! You don’t want to be liable for any unpaid or delinquent bills or fees.
8) Complete a final walkthrough with your realtor to make sure the property’s condition is as you expected. HUD does not make repairs. If you have a Repair Escrow, you will be required to make all necessary repairs after closing
9) Obtain a Cashier’s check for the final amount due for down payment and closing costs. Sign closing documents with title. Collect keys from your realtor.
10) Change locks and return HUD’s keys to lockbox for listing agent to pick up.
11) It’s time to move in! 🙂
Of course, this is a basic outline. There will be a lot of paperwork to sign throughout the purchase process. Every transaction is a little different. Your realtor will guide you through it.
Jana Haren Realtor, MSSC