FAQs

Good Neighbor Next Door FAQs

Here is a collection of frequently asked questions regarding the Good Neighbor Next Door program. If you have any other questions, not listed here, feel free to call us at 877-878-1982.

Is the Good Neighbor Next Door a legitimate program? Yes, this a United States Department of Housing and Urban Development program that has been created for the benefit of civil servants when purchasing a designated HUD home. If you want verification you can visit HUD’s website. The program has been created for teachers, firefighters, police officers, and EMT’s.

What does it mean that these houses are 50% off? HUD has their homes appraised based on their current condition. The homes are discounted from this appraised price.

What is a HUD lottery? HUD allows GNND participants to enter the lottery for a HUD designated qualifying property during a 7 day period. Participants are required to use a HUD registered real estate broker to submit their “bid.” This bid does not allow you alter the price or ask HUD to pay closing costs. (HUD will allow participants to roll their closing costs into their FHA mortgage.) All participants who enter the lottery will have the same chance of winning the opportunity to purchase the home through the Good Neighbor Next Door program at a 50% discount.  For verification of  information go to www.hudhomestore.com or www.hudpemco.com.

What is a HUD home? HUD acquires properties from insured lenders who have foreclosed FHA loans.

Are HUD homes bad homes? Just because it’s a HUD home doesn’t mean it’s a bad home. The only reason it’s a HUD homes is because it has gone through foreclosure.

Do all HUD homes qualify for the Good Neighbor Next Door program? No. Only the homes that are designated by HUD are eligible.

How often do Good Neighbor Next Door homes become available? Every day homes are listed some where in the country. Sign-up on the notification list so that you will be notified when a home becomes available in your community.

How long do these homes stay on the market? These homes are only listed for a seven day period. If they don’t sell through the Good Neighbor Next Door program then they will go to the general HUD list at full list price, without the ability of purchasing them through the Good Neighbor Next Door program.

Do I have to live in the Good Neighbor Next Door home that I purchase for a certain length of time? To receive the full 50% discount you agree to live in the home for three years. A silent second “Good Neighbor Next Door” mortgage is held by HUD for three years. You don’t have to financially qualify for this mortgage and there is no monthly payment.

What if I move out of the house before three years? You will still receive a discount, but it will be prorated according to how long you live in the house.

If I own the house, how can HUD enforce how long I own the home? HUD will require that you sign a silent second mortgage in the amount of the discount. There is no monthly payment or interest on the second mortgage. HUD uses the second to track your home ownership. If you sell your home before the three-year anniversary date then a prorated portion of the second mortgage will be due at closing. This second mortgage will automatically drop off after three years.

My name has been on a deed in the past year, do I still qualify? No, neither your name nor your spouse’s name can have been listed on any real estate deed in the United States in the past year.

Are there any other benefits associated with the Good Neighbor Next Door program? Yes. If you get an FHA loan HUD will allow you to finance in all of your closing costs, move-in for only a $100 down payment, and finance certain home repairs.

How do I submit a bid? You can fill out a form on this website. A HUD-registered qualified broker will call you and give you access to the home, assist you with locating a lender, and monitor inspections & the closing process. We will work with that broker to make sure the closing process goes smoothly.

Who pays the real estate broker? For the Good Neighbor Next Door program, HUD requires that the buyer pay the real estate commission. If you get an FHA loan HUD will allow you to roll the commission into your mortgage. On each property that’s listed on this website there is an approximate mortgage payment. This payment includes the financed commission.

Can I bid higher or lower than the list price? No. In this program HUD will only allow you to submit “an intent to purchase” for full list price. This list price will be discounted by 50% at closing. Everyone who bids will have identical bids.

If there is more than one person bidding on a home, how does HUD determine who wins the house? A computer will randomly decide who wins.

Can you bid on more than one home? You can purchase only one home, but to increase your chances of winning one of the houses you can submit bids on different houses. HUD limits people to only one Good Neighbor Next Door home in their lifetime.

How much earnest money is required? HUD requires that you give your broker a cashier’s check or money order for 1% of the home’s list price. On a $100,000 home your earnest money will be $1,000. HUD has a minimum earnest money requirement of $500 and a maximum $2,000.

I thought the down payment was only $100, what’s this 1% of list price? The 1% earnest money is refundable at closing or if you are not selected as the winner of a home. If you are selected as the winner of a Good Neighbor Next Door home and if you want to finance in all of your closing costs with only a $100 down payment, then you could receive back a check at closing. This check will be your earnest money minus the $100 down payment.

What if there are significant repairs required on a home and I don’t have the cash to fix it? You are able to get a specific type of FHA loan (203K) that will allow you to finance up to $35,000 worth of home repairs into your mortgage.

Can I use a Good Neighbor Next Door homes as an investment? Yes, but only if you occupy the home and don’t own any other real estate. After three years you can sell the home, realize any increases in value, and pay off the discounted mortgage that you have. Since this is your principal residence you can claim a capital gains exemption and not be taxed on gains. Consult your CPA for details.

What if my employment changes before the three years is up? After you close your discount will not be in jeopardy.

What do I do next? What is the process?  1. Fill out the our form and we will contact you.  Everyone is required to have a letter of prequalification or proof of funds before submitting an “intent to purchase.” You may use any lender that offers FHA financing. If you would like us to help you through the process fill out this questionnaire and we will have a lender get in contact with you. Often, people can get a letter of prequalification within hours of contacting one of the lenders we recommend. 2. View the home.  3. Get either a cashier’s check or money order for 1% of the home’s listed price. 4. Decide on one or more homes to submit your intent to purchase.

 

 

 

 

 

 

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