Breaking News:
HUD and FHA Announce a NEW PROGRAM for HUD Purchases in the State of Michigan!
Buying HUD Homes |
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When the Department of Housing and Urban Development or simply HUD was created back in 1968, the focus was to help manage federally subsidized housing and the development of new communities in urban areas. Today, HUD has taken on a lot more responsibility in the housing market and that has increased consumer interest in buying HUD homes. What is a HUD Home?To understand where HUD gets their homes from, you need to understand a little bit more about HUD's role in this housing market. For example, there is a branch of HUD - the Federal Housing Administration or FHA - that provides the housing market with mortgage insurance. Since one of the objectives of HUD is to help individuals own homes, they can do this by offering FHA backed loans to qualified applicants. Since many of the individuals seeking assistance from HUD are first time home buyers or "high" risk mortgage applicants, gaining FHA insurance on the loan allows lenders to offer reduced rates to these same applicants. Without the risk of default on the loan, the lender can pass those savings on to the mortgage applicant. When an applicant cannot make their mortgage payments and the home goes into foreclosure, the FHA pays the lender's claim on the property. Essentially, they pay off the remaining balance or principle on the mortgage plus any expenses incurred by the lender. When this happens, ownership of the home is transferred to HUD. This is where HUD gets its homes from. HUD Home CostsOnce HUD takes ownership of a home, they turn it over to their Property Disposition Department. This group makes sure the property is protected from vandalism or other types of damage, and then determines if the property is going to be sold through HUD itself or a real estate broker. These homes are then professionally appraised, whereby the price of the home is adjusted to reflect the local housing market and any repairs needed. Generally, HUD homes are in the low to moderate price range for a given area. Repairs and Financing of HUD HomesHUD does not make repairs to homes; they are sold "as-is" and without warranty. New owners are responsible for making any repairs or improvements they deem necessary. These properties are also sold on a "cash" basis. Don't expect to automatically get financing through HUD following a property sale, you need to work with your lender to have financing available if you are successful in bidding on a home. If you've got the winning bid and you are not able to secure the financing and close on the home, you may lose any and all of the deposit money you submitted with your bid. As always it is best to have your financing set up prior to placing a bid. HUD Home Buying ProcessIf you're interested in buying a HUD home, then you need to work through a local real estate agent or an authorized HUD broker. Century 21 Goldmark is an authorized HUD brokerage. Century 21 Goldmark will provide a list of new listing of HUD homes available for sale each week. Once you've secured a list of available properties, you need to follow the same home buying process we've recommended before. Our series for first time home buyers a great start to understanding what you need to look for in a new home and some of the things you will need to do such having the home inspected. Bidding on HUD HomesIf you find a home that you like, you need to submit a bid through your HUD agent. Normally, HUD homes are sold during an Offer Period, after which bids are opened and the highest "reasonable" bid is accepted. If you are the successful bidder, your will be notified through your HUD agent. Century 21 Goldmark will help you to complete all of the required paperwork. You will then get a settlement date, which is normally 30 - 60 days out. During that time you need to finalize your financing arrangements and close on the home. If you do not successfully close in this timeframe, you may lose any or all of your deposit. Homes as InvestmentsHUD's "dream" is that every American family owns their home. This means they are really interested in selling these homes to individuals and families that plan to live in the home. Homes sold during the Offer Period first go to buyers that plan to use the home as their primary residence for at least 12 months. Homes not sold after this time are then offered to all buyers, including those interested in purchasing the home for investment purposes. Finally, keep in mind that HUD also offers special home buying programs for teachers and law enforcement officers that are willing to live in the neighborhoods in which they work. Contact Century 21 Goldmark for further details.
586.779.1500 - Office 586.779.5799 - Fax
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