HOW2: Buy a Home for Half Off

I love sales, don’t you?  Well, there’s a program (a legitimate program with the Department of Housing and Urban Development, not something that’ll get your knees broken by mobsters or land you in jail) that lets you get a home for half – HALF – its fair market value.  And you only have to pay $100 down.  It’s called the Good Neighbor Next Door program, and yes, as you might expect, there are several limitations and qualifications.  But if you meet them, you can buy a home for half the asking price.

Basically, the government wants shoddy neighborhoods to be a little less shoddy.  So they have decided that what those neighborhoods need are more police officers, firefighters, teachers, and EMTs living in them.  Said neighborhoods have kids who may be in – or think they want to be in – gangs, and (typical bureaucracy logic) these folks must know how to handle that kind of thing, right?  So the government has also figured out that no up-and-coming public servant is going to move their families to a sketchy neighborhood unless they have to have a really good reason to do so.  Ergo, 50% equity in the property after three years.  So they move in, stay 3 years, and BAM – half their loan is forgiven.

Here’s the gist:

THE PROPERTY

• has to be in a government-approved ‘hood, er, Revitalization Area.
• has to be for sale through the Department of Housing & Urban Development (HUD homes are homes where the former owners had FHA or VA financing and stopped making their payments – they’re like foreclosures but owned by the government, not by a bank).  All HUD’s available inventory is listed on their website, HUDHomeStore.com.  You can search specifically for GNND homes on HUDHomeStore.

THE BUYER

• can’t be, or be married to, anyone who has done this deal before.  Ever.
• has to live in the property for at least 36 months before they get the discount.
• can’t have owned any property for the last 12 months.
• has to be able to qualify for the full amount.

THE OFFER

• has to be for the full asking price.
• can’t ask HUD to pay closing costs or Real Estate commissions.  If you can’t pay them yourself you’ll need to add that to the sales price and finance it.
• If you roll closing costs into the loan, remember that HUD will not forgive half of the RE commissions or closing costs (duh) so you’ll still have to pay them off
• Also, your bank won’t lend any more than the property is worth, so make sure that your property will appraise for the higher price before you get too far down the road.
• And don’t forget, you have to qualify for the full amount of the loan you get.  The more you add to the price, the more you have to qualify for.

THE FINANCING

• can be cash or any other type of (legal) financing
• IF you get an FHA loan, though, you have to be able to qualify for the entire contract price

And that’s that.  And even if you don’t qualify for the GNND program, don’t rule out HUD homes as an option, whether you’re looking for a new place for yourself or for investment property.  If you are interested in buying one or would like more info about the process, give us a call.

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