Good Neighbor Next Door Financing Colorado
Posted by Stephen Connelly on Sunday, February 14th, 2010 at 11:16am.The Good Neighbor Next Door (GND) Program is a HUD designated housing program for police officers, teachers, fireman and EMT's. Homes are located in revitalization aeas and are offered at a 50% discount from the list price. The buyer is required to live in the home for 36 months and HUD places a silent second behind the first mortage.
There are nuances to the Good Neighbor Next Door Program and is unlike a standard real estate transaction. I would strongly recommend that you interview both your Realtor and loan officer to make sure that, you- the buyer, do not lose the transaction or possibly end up paying unnecessary cost. HUD places deadlines that have to be met and will release a property to the next offeror if dates are not met.
The most common question that I receive is How do I finance the transaction for a Good Neighbor Next Door house? This transaction can be financed with cash or through conventional or FHA financing. Keep in mind; most of the homes require some sort of renovation to make them habitable. At a minimum, these homes need paint, flooring and appliances. The worst case requires all new mechanicals, kitchen, baths and flooring. This is where financing knowledge for the Good Neighbor Next Door program is most critical.
FHA has a 203(k) home renovation program that finances repairs that exceed $5,000 and a 203(b) program for repairs under $5,000. The mortgage and the cost to repair amount is combined into a single payment. The repairs are managed by a general contractor.
There is one other local option to the Good Neighbor Next Door Program in Colorado through Westerra Credit Union. Westerra Credit Union has a program where you have the first mortgage, HUD's silent second and then a third note that carries the same interest rate as the first. The third note is calculated based on 15% of the total purchase price. So for example, if the purchase price is $100,000 then the notes will look like this.
- First Note - $50,000 payment required
- Second Note - $50,000 silent - acts as a lien for 36 months
- Third Note- $15,000 payment required
This is a great financing program that allows the buyer to roll all closing cost into the third note and the buyer is not required to put any additional monies down. The buyer still has to secure the property with the 1% earnest money that is required by HUD and is applied to the closing cost.
The FHA 203(k) program and Westerra Credit Union's program are apples and oranges. You really need to put both on paper to decide which program is better for your life style and finances.
For complete access to the Good Neighbor Next Door Program, contact Stephen Connelly or go to www.househunterscolorado.com. Working with a dedicated agent on your next home purchase will save you time, and add professional assurance to every step of the process. With the guarantee of a solid investment, the decision could also make you more wealthy when it's time to sell.
I am hear to support your search for a home and give you a platform to find information to make informed decisions. Although I am always adding to this site, there may be questions that you have and can be reached via email or by phone. No question is unheard and all questions are answered.
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