If you are interested in purchasing a new home, it is possible to save an extraordinary amount of money by purchasing an HUD home.
HUD homes are often offered well below market price and most HUD homes are in great condition. An HUD home is a home that is sold by the Department of Housing and Urban Development (HUD) after a FHA-insured mortgage is foreclosed upon. These homes are sold “as is” so it is important for you to understand both the benefits and drawbacks of these homes. While HUD homes are initially only available to households that intend to reside within them, after an initial period, the homes that have not yet sold will also become available to investors and other types of buyers. While the HUD does not provide financing for HUD homes, you can purchase a home by utilizing your own personal finances or by acquiring a loan. To learn more about HUD homes, including the advantages they have to offer and how you can view the HUD homes in your area — review the sections that have been provided below.
HUD homes are homes that are available through purchase from the United States Department of Housing and Urban Development (HUD). They are homes that have previously had Federal Housing Administration (FHA) loans that have been defaulted on. After the FHA insured home is foreclosed on, the HUD attempts to sell these homes at below market price in order to make back some of the money lost in the default. Due to the low sales prices, these homes generally get purchased quickly.
HUD homes are generally one- to four-unit properties, many of which are still in excellent condition while others may need work. HUD homes do not come with any sort of warranty and homes are purchased “as is”. Anyone can purchase an HUD home. While initially offered to individuals who would like to purchase and use the home as a primary residents, unsold properties will become available to all types of buyers, investors included, following the initial priority period.
As mentioned previously, HUD homes are sold “as is”. While most of these homes are still in prime condition, the HUD strongly urges all prospective buyers to hire a professional home inspector prior to placing an offer on the home. This home inspection is to ensure that you are satisfied with both the value of the home and the condition of the home before purchase. This can help prepare you for any additional expenses that the HUD home may bring, should you choose to purchase it. The home inspector will evaluate the home in great detail, including the state of the foundation, roof and the interior. The HUD does not provide any sort of warranty on the home, but if desire a HUD home that is in need of repairs, you may be eligible for an FHA 203 (k) Rehabilitation loan or other financing options.
The Department of Housing and Urban Development (HUD) does not provide financing options for their own. They accept cash offers, but you can also apply for a loan through an approved broker. It is worth knowing that mortgage lenders must be certified in the sale of an HUD home. If this is your first home purchase, you may be eligible for an insured mortgage through the Federal Housing Administration (FHA), which are often available to households with lower income, lower credit scores and lower down payments as opposed to a normal mortgage lender.
One of the incredible advantages of purchasing an HUD home comes in the form of the HUD’s Good Neighbor Next Door program. This program is designed to help communities flourish and promote ownership by offering up to 50 percent off of an HUD home’s listing price to qualifying buyers. In order to qualify for the Good Neighbor Next Door program, you must either be a law enforcement official, a firefighter, an emergency medical technician (EMT) or a teacher that teaches classes anywhere between pre-Kindergarten through 12th grade. Should you take advantage of the Good Neighbor Next Door Program, you must commit to living within the property as your sole residence for a minimum of 36 months.
Property listings can be viewed on the HUD Home store at any time. Mortgage lenders and brokers who are approved to help you in your purchase of an HUD home can also provide you with more information about these homes. Should you choose to view the homes that are available within your neighborhood online, it is important to be aware of the superior search functionality that the HUD has to offer. By using convenient search properties, you can not only narrow your search by location, but also by price range, bedrooms, bathrooms and the status of the home.
HUD homes are accompanied by a wide range of benefits. Some of the advantages that HUD homes have to offer include:
While there are a lot of benefits to purchasing an HUD home, HUD homes do have their pitfalls. In order to know whether or not an HUD home may be right for you, it is important to be aware of these drawbacks, including:
Whether or not an HUD home is right for you and your household will heavily depend on your situation and personal preferences. As mentioned previously, many of the drawbacks of HUD homes can be easily discovered beforehand by simply hiring a professional to review the home prior to making an offer.