Repair Escrows for Kentucky USDA, FHA, VA, Fannie Mae Home loans

 

Most Kentucky mortgage lenders prefer that each property be 100% complete at the time of closing; however, there are situations that warrant exceptions for escrow holdbacks, such as weather-related circumstances, lack of materials available for finishing, foreclosure sales and short-sales where the seller cannot or will not allow property repairs to be completed prior to closing, among others.

Escrow holdbacks are used to facilitate loan closings for properties that are ready for occupancy but that require minimal completion or repair per the appraisal. The buyer or seller is required to establish a cash escrow that will ensure the completion of the required repairs. The cash escrow will be 1.5 times the cost of the estimated repairs (non-HUD REO properties). The proceeds of the cash escrow are held in an escrow account  until the incomplete items or repair requirements are completed.

Upon completion of the repairs, a final inspection by the appraiser will be required to release funds. Therefore, a Change of Circumstance form to add the inspection fee must be submitted within within 3 days of notification of repair requirements.

Maximum Repair Escrow Amounts for Kentucky Mortgages: 

Kentucky Fannie Mae Loans:
The cost of completing improvements must not represent more than 10% of the “as completed” appraised value of the property.

Kentukcy FHA Loans:
There is no maximum amount to be held in escrow for the cost of repairs required by appraiser.

Kentucky FHA Loans: (HUD REO):
The maximum limit of cost of repairs for escrow holdback is $10,000, plus $1,000 contingency included in the loan amount.

Kentukcy VA Loans:
There is no maximum amount to be held in escrow for the cost of repairs required by appraiser.

Kentucky USDA Loans:
The maximum amount to be held in escrow for repairs required by appraiser cannot exceed $5,000.

Conventional & FHA Repair Escrow Options are available!

CONVENTIONAL Buyer funded Max. 10% “As Completed Value”  Any safety, soundness or structural repairs are ineligible 90 days to complete the work$200 Re-inspection fee FHA Buyer funded; max. $5,000 HUD REO must be financed in the loan, max. $10,000 Any safety, soundness or structural repairs are ineligible Max. $5,000 with $5,500 total escrow hold back with contingency reserve 90 days to complete work $200 Re-inspection fee