Almost anyone can buy a FHA foreclosed home, offered by HUD, and usually get a good bargain.
What Is a HUD Home?
Let's say someone has bought a residential home with a Federal Housing Administration (FHA) mortgage, and then forecloses on that property. The FHA transfers the ownership of the property to the Department of Housing and Urban Development (HUD). HUD becomes the property owner and offers it for sale to recover the loss on the foreclosure.
Who Can Buy a HUD Home?
You can buy a HUD home - provided that you have the money or can qualify for a home loan to purchase the property. HUD homes are first offered to people who will occupy the property as their primary place of residence. After a period of time, if the property is not sold to an owner-occupant, it is made available to all buyers, including investors.
How Are HUD Homes Sold?
HUD homes are sold differently than most real estate properties. They are sold through a bidding process. To get in on the bidding, you will need to work with a real estate agent registered with HUD. The real estate agent may submit an offer and contract to purchase on your behalf. In most cases, HUD will pay the real estate broker's commission.
HUD homes are first sold during an "Offer Period" where properties are generally sold to the highest bidder. If homes remain unsold at the end of the Offer Period, your real estate agent can submit a bid, or bids, until the home is sold.
All HUD properties that are made available to the public by management companies under contract to HUD. These management companies offer the homes for sale on internet listings. To view listings of HUD Homes or to find HUD-approved real estate agents, visit: http://www.hud.gov/homes/homesforsale.cfm.
Even better, start your home buying process by contacting a HUD-approved housing agency in your area for unbiased and free counseling. See a list of these agencies at: www.hud.gov/offices/hsg/sfh/hcc/hccprof14.cfm.
Should I Get a Professional Home Inspection?
Of course! As with any home purchase, getting a professional home inspection is a must. A thorough inspection will help you and your real estate agent determine a bidding price. Keep in mind that HUD Homes are sold "as-is," without warranty. HUD homes often require repairs. HUD will not make repairs nor pay to correct any problems.
Does HUD Offer Financing?
And now we come full circle. Although HUD does not offer financing directly, some HUD homes qualify for, you guessed it, an FHA home loan. Though getting an FHA loan is often a good option, you should shop around for a home mortgage lender to find the best loan terms. To see if an FHA home loan is right for you, visit: www.hud.gov/fha/loans.cfm.
Regardless of how you get financing for your HUD home purchase, you can request HUD to pay all or a portion of the financing and closing costs.
Special Programs for Special People
HUD has a program called Good Neighbor Next Door where properties in designated areas are available at a reduced sales price to law enforcement officers, teachers, firefighters, emergency medical technicians, nonprofits and local governments. To read more about Good Neighbor Next Door, visit: www.hud.gov/offices/hsg/sfh/reo/goodn/gnndabot.cfm.
- How To Buy A Foreclosed House
- What are the FHA Loan Requirements?
- What is FHA Streamline Refinance?
- First Time Homebuyers Guide
- Financial Assistance for First Time Homebuyers
- How to Avoid Foreclosure
- What Is Foreclosure?
- Tips on Buying a Home
- How to Sell Your Home In a Down Market