Intrested In Buying A HUD Home?
When the Department of Housing and Urban Development or simply HUD was created back in 1968, the focus was to help manage federally subsidized housing and the development of new communities in urban areas. Today, HUD has taken on a lot more responsibility in the housing market and that has increased consumer interest in buying HUD homes.
What is a HUD Home?
To understand where HUD gets their homes from, you need to understand a little bit more about HUD's role in this housing market. For example, there is a branch of HUD - the Federal Housing Administration or FHA - that provides the housing market with mortgage insurance.
Since one of the objectives of HUD is to help individuals own homes, they can do this by offering FHA backed loans to qualified applicants. Since many of the individuals seeking assistance from HUD are first time home buyers or "high" risk mortgage applicants, gaining FHA insurance on the loan allows lenders to offer reduced rates to these same applicants. Without the risk of default on the loan, the lender can pass those savings on to the mortgage applicant.
When an applicant cannot make their mortgage payments and the home goes into foreclosure, the FHA pays the lender's claim on the property. Essentially, they pay off the remaining balance or principle on the mortgage plus any expenses incurred by the lender. When this happens, ownership of the home is transferred to HUD. This is where HUD gets its homes from.
HUD Home Costs
Once HUD takes ownership of a home, they turn it over to their Mortgage Compliance Manager group. The Mortgage Compliance Manager receives the property and ensures its condition and marketibility. The home is then turned over to Field Services which inspects and makes sure it is safe and secure. Asset Managers ensure that the property is accurately and competitively valued and manages the entire sales process. A HUD home is offered for sale at fair market value, based on a recent apprasial. Sold As-Is, these homes vary in Price, location and condition.
Repairs and Financing of HUD Homes
HUD does not make repairs to homes: they are sold "as-is" and without warranty. New owners are responsible for making any repairs or improvements they deem necessary; however, Buyers are allowed and encouraged to get independent home inspections.. These properties are also sold on a "cash" basis. Don't expect to automatically get financing through HUD following a property sale, you need to work with your lender to have financing available if you are successful in bidding on a home.
If you've got the winning bid and you are not able to secure the financing and close on the home, you may lose any and all of the deposit money you submitted with your bid. As always it is best to have your financing set up prior to placing a bid.
HUD Home Buying Process
If you're interested in buying a HUD home, then you need to work through a HUD registered Selling Agent. Beth Mason, RE/MAX Alliance, is a HUD registered Selling Broker, and can provide you with a list of new listing of HUD homes available for sale each week.
Once you've secured a list of available properties, you need to follow the same home buying process we've recommended before. Our series for first time home buyers a great start to understanding what you need to look for in a new home and some of the things you will need to do; such as an independent home inspection.
Bidding on HUD Homes
If you find a home that you like, you need to submit a bid through your HUD agent. Normally, HUD homes are sold during an Offer Period, after which bids are opened and the highest "reasonable" bid is accepted. If you are the successful bidder, your will be notified through your HUD Selling Agent.
Beth Mason, RE/MAX Alliance, will help you to complete all of the required paperwork. You will then get a settlement date, which is normally 30 - 60 days out. During that time you need to finalize your financing arrangements and close on the home. If you do not successfully close in this timeframe, you may lose any or all of your deposit.
Homes as Investments
HUD's "dream" is that every American family owns their home. This means they are really interested in selling these homes to individuals and families that plan to live in the home. Homes sold during the Offer Period first go to buyers that plan to use the home as their primary residence for at least 12 months. Homes not sold after this time are then offered to all buyers, including those interested in purchasing the home for investment purposes.
Finally, keep in mind that HUD also offers special home buying programs for teachers and law enforcement officers that are willing to live in the neighborhoods in which they work.
You can request your free report by simply filling out the information on the form below including the specific price range and area you would like the "HUD Availability Report" on. When you have completed the form just click the "Submit" button at the bottom of this page.
Boulder Real Estate - Beth Mason
4770 Baseline Road
Toll Free: 800-373-1282
Business Phone: 303-589-5478
Business Fax: 303-496-0301