Difference between Insured / Insured With Escrow

[Samantha M.]

There are two categories of insured HUD homes.

1) Insured
2) Insured with Escrow

Both of which qualify for FHA financing once the repairs have been made correct? Whats the difference exactly between "insured" and "insured with escrow"

Thanks!

[Melissa W]

It only matters if you are getting a loan. As my loan agent explained it to me, IE is Insured with Repair Escrow and the loan is a 203B. The repair escrow is an amount of money that the buyer must deposit into an escrow account with their lender. Some lenders require 1.5 times the amount of the repair escrow. Then you have to complete the work HUD requires within a certain time period, and they will give you the money back from the repair escrow. You must turn in bills from a contractor, even if you can do the work yourself. The loan agent said this is a major, major headache. My client decided not to buy a HUD house.

Or you can get a 203K loan, where they loan you the money to do the repairs as well as the purchase price.

Or, just pay cash.

I never tried to sell an insured HUD property, but I would guess there isn't as much damage and they don't make you do the escrow if you have a loan.