Someone with a FHA insured mortgage cannot make payments on his mortgage anymore and the house is foreclosed. Then HUD pays the lender and is now an involuntary
homeowner. When these properties come back on the market they will be listed in the local listing service but will particularly show up on the HUD real estate owned website (HUDhomestore.com) for the public to see. You can get a great deal on HUD but it’s best to do a little homework ahead of bidding so you’ll know what to expect.
Preparing to buy a HUD home:
- How will you pay for the house? Speak to several lenders, however, I suggest you keep it local.
- conventional loan
- 203k (renovation loan)
- 203b (regular FHA loan)
- VA loan if applicable
- Get a good estimate on how much cash you’ll need on hand in order to purchase a HUD home:
- ask your lender how much money you’ll have to bring to the table. (3.5 % down?ie.) A Good Faith Estimate can give you an estimate, but ask what cost are not considered in the calculation. The good faith estimate, or GFE for short, is required by law to be provided by lenders when you are seeking a loan. It lists out the estimated closing costs, monthly payments, and interest rates for the loan program you are looking at getting
- depending on home price $1,000 earnest money (deposit) is requested
- consider setting cash aside for
- turning on utilities if it’s not winterized (around $30 plus usage here in the springs), $150 if the home is winterized and needs to be re-winterized after you have done your inspection
- possibly: home inspection cost (recommended)
- possibly: radon testing
- possibly: termite testing
- possibly: structural engineer
- possibly: sewer scoping
- possibly others: roof, well, easement, methamphetamine
- If you are taking advantage of the FHA $100 down program and you have offered more than the listing price for a home, you will have to bring the difference between list price and offer price as a down payment to the table.
(Be aware that as of 2013 FHA rules and ‘prices’ like MIP are changing – as your local loan officer about it)
If you have any questions, are ready to view a home or offer on a HUD owned home I would be happy to talk to you about buying a HUD owned home. I am a HUD licensed agent and can help you. Call me, text me 719-321-0800 or email me at firstname.lastname@example.org