Good Neighbor Next Door Pros and Cons
GNND Pros and Cons
The pros and cons of the Good Neighbor Next Door program.
Good Neighbor Next Door Program Pros and Cons
The Pros of the Program:
- One of the greatest advantages of the program is affordability. You will essentially be paying half the mortgage payment you would be for the very same house if purchased outside of the program.
- Another major benefit of the good neighbor program is that you will be immediately walking into equity. Assuming the property you choose is accurately appraised at the purchase price you will have exactly that amount in equity. So if you buy a $200,000 home for $100,000 you will have $100,000 is positive equity. This means that after the 3 year occupancy rule you will be eligible to sell your home and you could be walking into $100,000 in equity!
- If you qualify for an FHA good neighbor next door loan you will only be required to put $100 down as the down payment. This is significantly lower than the typical 3.5% required down payment on FHA insured home purchase loans. Additionally, you can have all of your closing costs included into the home loan.
The Cons of the Program:
- Something to consider is that the HUD homes being offered are in “revitalization areas” which are not always in the safest or most desirable areas. They typically (not necessarily always) are economically depressed and have an above average crime rate. It is for this sole reason that we do not recommend the program. We will not deter a borrower that wants to pursue the program, but we have decided not to endorse it.
- If you have an unexpected circumstance that causes you to have to move during the 3 year period you will be stuck having to payoff or foreclose on the second mortgage. This could result in devastating consequences financially. If you buy one of these homes at the discounted price be as certain as possible that you will not be needing to move in the next 36 months.