HUD Gov Homes Sale
HUD is the acronym for Housing and Urban Development, or U.S. Department of Housing and Urban Development to be exact. One of the main functions for this government department is to provide HUD foreclosures to the public for resale.
A HUD home is a residential property that is 1 to 4 units. In other words, HUDs are single family homes, duplexes, three plexes, and four plexes.
Anyone can buy a HUD home if they can qualify for a loan, or if they have cash. And yes you can find some great deals with HUD homes.
I will tell you where HUD foreclosures come from, how HUD sells their foreclosures, what an FHA loan is, and why it is so popular, and how to buy HUD homes.
Where do HUD foreclosures come from?
How does HUD come upon these foreclosures to be able to offer them for sale to the public? The loan guaranteeing arm of HUD is the FHA, Federal Housing Administration.
The role of the FHA is to insure loans with FHA approved lenders or mortgage companies in order to make it easier for home buyers to afford the costs of purchasing real estate, as well as make it easier for lenders or mortgage companies to make loans.
When a mortgage holder defaults on an FHA mortgage, the lender or mortgage company can call in the insurance with the FHA and recoup their costs of writing the loan.
The FHA, in turn, takes ownership of the property, and turns it over to HUD to handle the marketing and selling of the foreclosed property. HUD then offers the property to the public in order to recoup their costs from the foreclosure claim.
How does HUD sell their foreclosure properties?
Once HUD takes possession of a home through an FHA foreclosure, it enlists the help of various entities. HUD has an appraisal, and an inspection done on their homes.
The appraisal, and inspection results are made available to the public. HUD has a designated Field Service Manager to prepare, and maintain the property and house for sale.
HUD also uses a designated HUD approved Listing Broker hired by the Asset Manager to list the home, and help market it to the public for sale. HUD also has an Asset Manager as the contractor responsible for the sale of the property.
The Asset Manager handles the paperwork/contracts and facilitates the deal and moves it to the closing date.
Once the HUD property is ready to be put on the market, the listing is placed in the MLS, multiple listing service by the Listing Broker, and is also listed on the HUD Home Store website.
Why are FHA loans so popular?
FHA loans normally have less strict requirements in order to qualify than a typical or conventional loan from a bank or mortgage company.
For instance, most lenders want to see a credit score of 640 in order to consider a home buyer for a loan. FHA, on the other hand, will consider you with a credit score of 580 or above.
Conventional loans usually require a minimum of 5%, and often times as much as 10% down payment toward the purchase of a home. FHA loans only need 3.5% of the purchase price of a home for the down payment.
It is also possible to have up to 3% of the purchase price of the home put toward closing costs with an FHA loan. This is money paid for you, and not by you.
As many people are short on cash when in the market for a home, these incentives help keep the out of pocket costs of home ownership low, and affordable for many people.
In addition, HUD also provides extra incentives like $100 down on selected properties from time to time. This makes buying a HUD home even easier and more affordable.
How to Buy HUD Homes
Buying HUD homes is a lot like buying any other homes, at least from a buyer’s perspective. And like buying any home, the first thing a serious buyer should do is:
1. Get preapproved for a home loan. You can do this through a bank, or a mortgage company. Be sure that your new lender offers FHA loans as FHA works best with HUD homes.
2. Find a HUD approved broker. Only HUD approved real estate brokers can sell HUD properties. This is normally not diffficult to find, as many real estate brokers are HUD approved.
3. Go to Hudhomestore.com This website lists the available HUD homes by city, state, number of bedrooms, number of bths, price, and other criteria.
You can find what HUD homes are available in the areas that you want to live easily on Hudhomestore.com Your HUD approved Broker/Realtor can also email you a list of HUD homes based on your specific criteria, if you prefer.
The HUD Bid Process
Once you have found a HUD home you like, it’s time to place your bid for this property. HUD works on a sealed bid process. This means that no one but HUD knows what you or anyone else has bid for a given HUD property.
When a HUD property is first listed HUD allows bids for 15 calendar days for owner/occupants only. This means you must live in the home and it must be your principal residence. The first 15 days are called the exclusive listing period.
For HUD Properties marketed as ‘insured’ or ‘insured with escrow,’ the exclusive listing time period is 15 calendar days.
For HUD Properties marketed as ‘uninsured,’ the exclusive listing time period is 5 calendar days.
All bids are treated as if they have been received at the same time. No preference is given to a bid that arrives sooner than another. If an acceptable bid has not been received during the initial 10 calendar day period, new bids will be considered each business day thereafter until an acceptable bid has been received.
If an acceptable bid has not been received during the 15 day exclusive listing time period, HUD will then accept all bids, including those from investors. This is called the extended listing period.
To present a bid to HUD, you will need to provide your name, address, phone number, social security number, marital status, and the amount you want to bid for your chosen property. Your HUD approved broker/realtor will present your bid online for you.
If you submit the winning bid, HUD will need a pre approval letter, or a proof of funds if you are paying cash for the property, and an earnest money deposit of either $500 or $1000, depending on the price of the property, to be submitted along with signed HUD paperwork/contracts within 48 hours.
Once all of this is received, and approved by HUD, you can then begin the process of closing on your purchase. If this process seems a bit daunting or confusing have no fear. Your HUD approved Broker/Realtor will guide through everything.
Are HUDs Right For You?
HUD stands for Housing and Urban Development, a government agency whose functions include providing foreclosures to the public. Anyone can buy a HUD home, and yes, you can find some great deals with HUD foreclosures.
HUD foreclosures are generated when FHA mortgage holders default on their loans, and the insured lender sells the property back to FHA/HUD. HUD sells their properties with the assistance of Asset Managers, Listing Brokers, and Field Service Managers all designated by HUD.
FHA, the Federal Housing Administration works hand in hand with HUD. FHA loans are so popular because they have less stringent requirements to qualify, and additional benefits for home buyers.
To buy a HUD home you should first be preapproved for a home loan by a lender that is FHA approved, find a HUD approved Broker/Realtor, and go to the HUD website, HUDhomestore.com to see what HUD homes are available in your area.
HUD works on a sealed bid process, and initially allows bids for owner/occupants only. Within 15 days if an acceptable bid has not been submitted, HUD opens the bidding to all bidders, including investors.
HUD Broker/Realtors are experts at navigating the HUD foreclosure bidding rules and regulations. They will guide you through the process, and make owning a HUD foreclosure property an enjoyable, and rewarding experience.