Can you add contractor bills to HUD

Question

Forgive the lack of correct terminology as this is my first time hearing about this.

I am in contract to purchase a multi family property for 155k with a 2% seller credit.  I know this property has the opportunity to appraise for higher than contract price.  The property needs new windows.  I have heard of people contacting the title company and adding a contractor bill which will then be wrapped into the mortgage.  Is this fiction?

Wayne Brooks · Answer

@Ryan Cleary That method has nothing to do with getting a larger mtg to buy.....it is for when someone is planning to refi within 6 months.  You can’t use appraisal for a refi within 6 months, only the purchase price plus Reno costs....so the buyer actually puts the Reno cash into escrow, along with the purchase price, so he can refi based on the purchase price And Reno costs.

Tanner Sherman · Answer

You should contact your lender to make sure this is okay with them. Yes it is possible, but if you are under contract for 155k and renegotiate with the seller to 160k plus an 5k credit at closing, the title company could do it (if you are working with an investor savy title company) in the form of a second position lien payout at closing. Some lenders do not like this, but if it will appraise for higher than contract then there is really no issue.

*It is not legal to negotiate any credit outside of the purchase agreement, so proceed with caution.*