What is the HUD as it pertains to refinancing and stating things about your real estate? Additionally • When you brrrr and have a contractor doing the work it is the refinance company who pays the contractor for their work per the HUD? What if it takes 2-3 months to finish all of the work? Is the contractor just supposed to have funds to tide them over till they get paid?

@Brock Norton a "HUD" is the final closing document you might receive when purchasing a home. A "HUD" or a "Closing Disclosure" or a "Settlement Statement". They all kind of serve the same purpose - they show all the fees and costs with the transaction. Depending on the type of transaction will decide which form you use. Now, sometimes a transaction will have work that is needed after closing and that work is "held in escrow"....meaning the title company holds it until the work is completed. It's not very common but it does occur from time to time. So if you do have this type of a scenario the work will be listed on the HUD/CD/Settlement Statement. And yes, the contractor is not supposed to get paid except once the work is done if it is listed that way on the closing document. There could be draws made too but it would have to be listed in the closing documents in the title company instructions if that's the case. Many title companies don't want to take that responsibility though. In general, they are just paid in full once work is done. Keep in mind this is entirely DIFFERENT than a contractor being paid through the loan you secured on the property if you got a renovation loan. There are plenty of other ways that a contractor can do work though on a home. It's only listed on the HUD/CD/etc if it is a condition of the sale type of thing. You can of course just get a contractor to do work on the property after closing. Hope this helps!

@Brock Norton, I think you may be confusing a few things here. Federal Housing Authority (FHA) loans are backed by Housing and Urban Development (HUD) to help new buyers get into a property with a very low down payment. An FHA 203(k) loan rolls renovation costs into an FHA loan. The contractor must be FHA qualified and will be paid in installments (called draws) when certain levels of completion are achieved. Typically, 3 draws: when the job starts, mid-way through, upon final completion. Refinancing, as a part of BRRRR, happens after the renovation is complete and the property has "stabilized," i.e. all units rented. Typically you have to wait at least 6 months after buying a property before you can refinance. This is called "seasoning." Hope this helps.

@Jaysen Medhurst thank you very much and same to @Andrew Postell

Updated almost 7 years ago on 12/20/2018. Most recent reply

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Brock NortonPoster

Centerville, UT

Creative Real Estate Financing

What is the HUD as it pertains to refinancing and stating things

Brock NortonPoster

Centerville, UT

Posted December 18, 2018 12:34

What is the HUD as it pertains to refinancing and stating things about your real estate?

Additionally

When you brrrr and have a contractor doing the work it is the refinance company who pays the contractor for their work per the HUD? What if it takes 2-3 months to finish all of the work? Is the contractor just supposed to have funds to tide them over till they get paid?

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