A HUD home is a property that has been foreclosed, which was originally bought with an FHA loan. This situation happens when house payments are not being made and the homeowner defaults on their loan. HUD homes become available first to those wishing to make it their primary residence, and secondly to investors. When investors rent out HUD homes, they must follow strict guidelines for hud screening criteria.
Buying a HUD Home
If you are looking to buy a HUD home, you will need to search for one on HudHomeStore.com as they are not able to be found among multiple listing services. Instead of being sold on the market, HUD homes are available at auction only. The only way for you to see these homes and place a bid on them is by hiring a real estate agent who has been HUD-approved.
After placing a bid, you must wait for 30 days. After this time has passed, HUD reviews all of the bids made and selects the highest one. If all of the bids are deemed too low, the bidding process opens up to investors. If your bid wins out, HUD contacts your agent, and you are generally given one to two months to close.
HUD Home Benefits
One benefit of buying a HUD home is that they are generally priced below market value because these homes have gone into foreclosure. Another plus is that HUD offers the buyer up to 5% of the purchase price to allow for closing cost assistance. HUD also facilitates buyers in making lower down payments and in some cases only $100 is required.
HUD Home Financing
Getting a HUD home financed is not much different from getting any other type of home. All buyers have the option of buying a HUD home with a conventional Fannie Mae or Freddie Mac loan. If you are a qualified veteran, you can choose a VA loan, and if you have struggled financially or have a lower credit score you can go with an FHA loan.
Whether you are looking for a home to live in or one to rent out, purchasing a HUD home is definitely something worth looking into.