WHAT IS HUD?
HUD owned Real estate is NOT low income, or section 8 rental property. A HUD home is the result of a foreclosed FHA insured mortgage. Once these properties foreclose, the lender is able to file an insurance claim with FHA for their loss and receive payment in exchange for the property. Then HUD brings the property to a marketable condition and puts it up for sale through Realtors like ourselves. We get many calls a day from customers looking to rent or lease purchase HUD homes. HUD will not rent or lease the properties. They are offered strictly for sale.
WHAT'S THE BENEFIT TO BUYING HUD?
Plenty! Besides getting a whole bunch of house for a little bit of money, other benefits include...
1. A HUD home is put on the market at the current appraised value. Dont miss the benefit of this small statement. HUD properties are appraised before they are listed. When you choose a HUD home, you know it is worth the asking price up front. FHA loans are required to use this appraisal for your loan. Unless you are doing conventional or 203K financing, you will not be required to purchase a new appraisal. That saves you money.
2. HUD properties offer special $100 down-payment financing through FHA. If you are obtaining an FHA loan on properties other than a HUD, FHA typically requires a minimum of 3.5% of the purchase price as a down payment. HUD properties are exempt from the 3.5% down-payment for a limited time to help move inventory off the market and clients into homes. The HUD property down-payment requirement on an FHA loan is as little as $100. You may elect to still put money down if you choose. Lenders may also choose not to participate in the $100 down payment program so ask your lender are they in or are they out!
3. HUD will pay 3% of the purchase price in closing costs for you. No need to haggle back and forth. They offer it up front. If you need it, use it!
4. HUD pays the attorney fee. Part of the process of purchasing a home is going to an attorney's office for closing. HUD has a contracted attorney office in place to close all HUD transactions. If you use this attorney, HUD pays their fee. You do have the option of using your own attorney if you choose but this will be at your expense. Something to keep in mind though - If you are obtaining financing, the attorney represents the Lender, not you, so you are just as well to allow HUD to pick up the tab and use the attorney they have in place.
5. Owner- Occupant preference. HUD properties are offered to purchasers intending to occupy the property as their primary residence first. The properties are offered for 30 days exclusively to owner-occupant buyers. Should the property remain available after the 30 day period, it will then become available to investors to bid.
6. Clear Title. HUD issues a clear title at closing. Any outstanding leins are satisfied and current year taxes are prorated. Every buyer is offered title insurance with post conveyance coverage which insures you that the property is yours fair and square. There are no stipulations where a previous owner can take the property back. Once purchased, you own that home.