Purchasing HUD Homes

Purchasing A HUD Property

It's crucial to fully understand both the foreclosure process and the HUD Program. It's not uncommon to be interested in purchasing a HUD-owned home.

You can start by reading the official information regarding HUD homes. This is a government program, so it comes with its fair share of rules. The U.S. Department of Housing and Urban Development provides a useful website that answers common questions about buying, inspecting and financing the purchase of HUD houses.

You will find helpful tips and information about inspections and loans. The site also contains state-specific information about regional resources to supplement the federal-level home-buying assistance programs. These differ from one state and another.

Be Prepared To Act Quickly

Know your competition. Investors may find HUD homes to be goldmines. They see the immense profit potential of renovating and flipping a property or renting it out. Is this a sign that you will be competing with real property investors who have greater capital access? Yes. Except for the initial 30 days. Legally, HUD does not accept bids for homes from real estate investors in the first 30 days after a property is put on the market.

You need to know where and how to begin looking. You can find HUD properties on numerous real estate sites. However, it is best to search for them through the U.S. government. Legally, only registered agents may represent you.

Be Practical About The Price

It is important to be realistic about your budget when financing. One of the most difficult lessons learned from the housing crash is the importance of purchasing a home with reasonable mortgage payments. To determine your monthly mortgage payment, estimated closing expenses, as well as other factors that can impact your purchase, you can use an online mortgage calculator.

Although window-shopping is acceptable, you should ensure that financing is secured in a timely fashion. The worst-case scenario is for buyers to find the house that they desire only to lose it because their loan application hasn't been approved.

With information about HUD resources, approach mortgage lenders. There are two options available: The $100 down payment program and the 203K rehabilitation and renovation loan. This loan is specifically designed for financing renovations needed at the time you purchase the property.

Do Your Research

You should review all information concerning the history of the home, including recent tax assessments and the average sales price of similar homes in the vicinity. The addenda to the property, which lists damages and any other legally mandated information on whether your dream home may have been a meth-lab, is part of this research. Many homes have drug-manufacturing histories. In some states, legislation has been adopted to protect future buyers.

It's almost impossible to obtain an FHA Loan for a home with methamphetamine contamination.

The Recommendation

Remove any negative impressions that you might have about HUD. With a little research and diligence, HUD homes can provide solid housing stock at a virtually unbeatable cost. Find out about all the federal and state resources that are available for FHA loans, HUD, and other resources to first-time home buyers. Visit the Department of Housing and Urban Development website. Once you have secured financing from a mortgage lender, found a realtor registered with HUD, and purchased your dream home you will want to thoroughly inspect it and conduct research into its history.