A HUD Home is an FHA insured mortgage that has gone into default, meaning the bank has foreclosed on the property. HUD does an appraisal on every home before they list it. HUD used to list every home at the appraised value, but that changed recently. Many times the HUD inspectors are only able to do a visual check since the utilities are not on. Bids, or offers, are made through a HUD-approved realtor who agrees to take only 1 percent in commission on the sale. During the initial offering, HUD homes are available only to those who wish to buy them as their primary residence. My strong advice is to find a realtor that has a lot of experience buying HUD Homes. HUD Homes have become viable investments since these homes can be found at attractive values.
All HUD homes are offered without regard to race, color, religion, sex, national origin, handicap, or familial status. If the home you’d like to see is in your area, you can also contact your preferred local real estate broker and ask if the office is approved to show HUD homes. Investors on HUD purchases must have a down payment of at least 25 percent for single-family residential units. The only way a buyer can be considered owner occupied is if the person living in the home will be on the deed when HUD sells the home.
Yes, you can use any lender, however, because the HUD purchase process is so much different than a normal home purchase, I would recommend that you use a local lender that is familiar with the HUD purchase process (this is important!). HUD defines a one-to-four unit property as either a single-family, duplex, triplex or fourplex. In the mid-West, for example, there are many homes to choose from because of the price range (FHA only insures mortgages of a certain dollar amount) and number of foreclosures.
They have HUDHomestore access and they have multiple lenders that deal a lot in HUD Home. Homes must then be used to create housing for families in need or to benefit neighborhoods. Extensions of this deadline can be authorized by HUD by prior written approval. Such properties are then generally sold off to the highest bidder through the HUD auction process. If a person is purchasing a HUD home with an FHA loan, HUD offers a $1 down payment financing incentive.
The result is that REO properties ‘ whether through HUD or the private sector ‘ often sell at low prices. All buyers MUST be accompanied by a broker or agent when viewing any HUD Home listed for sale. A list of registered brokers and individuals can be found thorough the HUD website Carini and Associates is a local listing broker for HUD properties.