What to Know Before Buying a HUD Home
The US Department of Housing and Urban Development, or HUD, assists those in need of affordable housing. A HUD home is one that has been previously foreclosed on an FHA-insured mortgage, and is then acquired by HUD. The house is then put up for sale by the HUD to make up for the loss from the foreclosure claim. By understanding the details of buying HUD homes, you can assess your eligibility to purchase a HUD home, and make the right decision for your family.
You may buy a HUD home if you have the necessary cash or have been qualified for a loan. The following information also determines whether you qualify for a HUD home:
· The real-estate broker you work with must be HUD-registered.
· Using an FHA loan as a purchaser is not required.
· A written pre-approval letter from a trustworthy mortgage provider IS required.
· First priority goes to the bidders currently occupying the home.
When planning to buy a HUD home, it is worth considering the purchasing options. Direct financing is not offered from the HUD, meaning that those interested in the house must provide their own means of payment. Payment can come in the form of the applicant’s own cash or through a mortgage lender. If you are unable to use these forms of payment, you may qualify for an FHA-insured mortgage, which is funded by a bank or other type of lending institution.
HUD homes are sold in their current condition, regardless of damages or other preexisting issues. Because any repairs will be the responsibility of the new owner, HUD strongly recommends that each new buyer arrange a home inspection before purchasing the house. It is important that you hire a licensed, professional home inspector to ensure that no issues go unnoticed. The following tips can help you check off the basics when scheduling a home inspection:
· Ask what the home inspection will entail – this may seem apparent, but affirming that your inspector follows a strict code of practice may save time and stress in the future.
· Ask about your inspector’s experience and for references proving they are highly skilled and reliable in home inspection.
· Be aware of the cost. Home inspections cost anywhere from $300-$500, but also be wary that, like many products and services, the cost does not necessarily determine quality.
· If the inspector refuses to let you attend the inspection, consider hiring a different professional – this could hint toward dishonesty.
· Ask about repairs. Some repairs can be made by the inspector, but it is always important to know the regulations beforehand (some associations forbid repairs made by inspectors).
Learning about the basics of buying HUD homes can save time, money, and stress in the long run. While there are many approaches one can take to purchasing a HUD home, sharpening your knowledge on qualifications, financial options, and home inspections can make you a wiser home buyer and owner.
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