These are usually properties being sold by or through HUD (Housing and Urban Development) and are properties that have been acquired through foreclosure by an FHA-insured mortgage. HUD becomes the property owner and sells the property to recover the funds lost on a foreclosure HUD home.
These are typically 1 to 4 unit homes– or residential properties– and can be houses or multi-family dwellings such as duplexes.
Anyone can buy a HUD home if they have the cash or can qualify for a loan. Initially, HUD homes are offered to owners intending to occupy the property as their primary residence. If no owner occupants purchase the property within an allotted time period, the property will then be offered for sale to all buyers– even investors.
All of the foreclosure HUD home properties for sale to the public are offered at internet listing sites that are maintained by contracted management companies for HUD. Real estate brokers that are registered with HUD are allowed to submit offers and contracts to purchase on behalf of their clients. If stipulated within the contract from the realtor, HUD will pay the real estate brokers’ commission.
There are special programs that allow for foreclosure HUD homes properties in a designated area to be sold at reduced prices to law enforcement personnel, teachers, firefighters, EMT’s, local governments, and all nonprofit organizations. These are referred to as Good Neighbor Initiatives.
Prior to purchasing a HUD home, you are encouraged to obtain a thorough inspection since HUD homes are sold as is with no warranty. HUD does not and will not make repairs nor pay to correct any problem that might arise.
HUD does not offer financing, but some of their homes will qualify for FHA-insured loans. Always check for a lender that offers the best loan terms. An FHA loan will insure the loan so that your lender can offer you a better deal. This means low down payments, low closing costs, and easy credit qualifying for foreclosure HUD homes.
An FHA loan can help in several more ways. It is a great loan for a first time home buyer because of the low down payments—around 3%– and the closing costs/fees can be included in the loan. For a fixer-upper FHA will allow you to buy a home and include all the costs of repairs and remodels in one loan (you can also refinance your own home in this way in order to make repairs or remodels). If you are a senior and own your home, you can get a ‘reverse’ mortgage that will enable you to convert a portion of your equity into cash. Need a more energy efficient home? You can include the costs of energy improvements/upgrades into an FHA Energy-Efficient Mortgage. Even mobile homes and factory built houses can be financed by FHA! There are two different loans for this purpose—one for land owners and one for residents of mobile home parks.
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