HUD Home Store – Is a HUD Home Right for You?
The HUD Home Store is the place to visit to locate the availability and bid on the list of HUD related houses. It is a site run by the HUD (The Department of Housing and Home Development). This type of property can be purchased with virtually any type of mortgage. The most popular option to buy the HUD homes for sale is the FHA loans.
What are HUD homes?
A HUD home is essentially a property that has been foreclosed on. The borrower took out an FHA mortgage loan to buy the property, but later defaulted on their payments which meant the home has been reclaimed by HUD. It is now being put up for sale. Any properties that are foreclosed on in these circumstances are placed for sale at Hudhomestore.com. Often the homes listed on this site can offer a very attractive bargain.
Anyone can search through the list of properties on the site and review the detailed information provided. The HUD Home Store is open to general members of the public, real estate agents, local government authorities, and brokers.
Many new home buyers will find the website to be a very useful tool to learn about the buying process and how to find a perfect family home. Beyond the ability to search for the new home, there are also specific sections dedicated to further education and advice.
For instance, there is plenty of useful information on the various programs available, upcoming training sessions, and more information from relevant government agencies.
If you believe you may benefit from buying a HUD home, there is absolutely no reason not to spend some time on the site browsing the wide-ranging home listings.
The preferred target audience for HUD is the owner-occupied market. This is the type of buyer that intends to use the newly purchased property as their main place of residence. All the properties listed on the HUD site start out as available to the owner-occupied market, but if a property does not sell within a certain time-frame, it can be offered to the wider audience, which includes investors.
What is HUD’s Role?
The role of the HUD is simply to facilitate the process of selling on the properties after the foreclosure took place on the FHA loan. This government agency is there to manage the properties and ensure the vacant homes move on as efficiently as possible. However, they are not involved in organizing any form of finance for the new owner. It is the buyer’s responsibility to look for appropriate finance via a private lender when needed.
The ability to get a loan is entirely based on your personal circumstances. Any mortgage application will be subject to the standard approval process. While the criteria will vary from one private lender to the next, the main issues considered include gross income, debt-to-income ratio, checking the credit score, employment history, etc.
What are the qualifying criteria?
The qualifying criteria for the HUD home are quite flexible. It is open to any potential home buyer that is able to get pre-approved for a mortgage and has not used the HUD home services in the last 24 months.
What is the best loan for the HUD homes?
One of the most common loan products for buying the HUD foreclosed home is the FHA loans. This type of home loan is perfect for borrowers with a low to moderate income. Also, the down payment is relatively attractive at 3.5%. It is worth shopping around to get the lowest rates and terms.
Other requirements for an FHA loan include proof of income, a solid history of employment, a minimum credit score of 580, and displaying two years of tax returns and W2’s.
How to search for HUD Homes?
The process of searching the available HUD homes is simply to visit the official HUD home store site. On arriving on the Hudhomestore site, you have access to a useful tool that lets your search using different criteria, such as state, city, number of bathrooms, number of bedrooms, price, etc. Also, in order to use the site it is necessary to register and sign up for an account. A useful benefit of signing up for an account on the HUD site is the ability to receive alerts in the event of a property that matches your specific needs gets listed.
Is it possible to look at the properties viewed on the site?
If you find a potential home on the HUD Home Store site and wish to see it in-person, you will need to get in touch with a real estate agent. They can help with the process of looking at the many different properties listed on the site. Any local real estate agent should be able to help with this matter. The realtor will be able to organize a time in which you can view a chosen property.
What is the process of placing a bid on these properties?
It isn’t possible to make a direct bid for a listed property on the HUD site. The bidding process must take place via your chosen real estate agent which can be placed online.
Using the specialist HUD buyers program
There are several specialist HUD buyers programs that are tailored to different markets. It is worth researching the options available on the HUD Home Store site to see if you are in a position to benefit. Let’s take a look at the programs:
Non-Profit Program – this program is intended to be used by churches or other faith based organizations. The non-profit program attracts a discount of up to 30% for all of the properties listed on the HUD store website which are then sold on to first-time and low-income buyers.
Good Neighbor Next Door – this is a great opportunity for Firefighters, EMTs, teachers, and officers of the Law to get an attractive deal on a property. This HUD program gives a 50% discount on the homes listed on the HUD website. However, it is a standard requirement for the buyer to use the home as a main place of residence for a period of up to 36 months.
One Dollar Home Program – this type of the HUD program is intended for the local government authorities who are looking to invest in property that can be used to house low-income families. It is only an option on homes that have been on the market for a period of 180 days or more and priced at $25,000 or less.
Can I get a home loan that lets me make repairs?
Many of the properties listed on the HUD homestore site are likely to need a little care and attention. If you find a potential home is in need for repair or renovation work, the best course of action is to apply for an FHA 203K loan. This is a type of loan package that combines the purchase of the home and also an extra sum for repairs. For instance, on the 203K Streamline loan, there is the option to get an extra $35,000 to carry out the necessary repairs.
Are the properties on the HUD Home Store site available to investors?
While the HUD properties are initially offered to buyers that intend to use it as their primary residence, they may later become available to investors. However, a certain period of time must pass before the rules are relaxed and a property is opened up to the wider audience.
Benefits of applying for a HUD Home
Many families and individuals are looking to apply for a home on the HUD Home Store site because there are plenty of incentives and benefits. The housing options are both decent and affordable. They have the potential to help a first-time buyer save literally thousands of dollars. Also, the time-frame to apply and buy a HUD home is quite appealing.
Here are a few of the benefits:
Monetary savings – a great benefit is the ability to save money on buying a HUD home. If you are eligible for one of the special programs, there is plenty of money to be saved on the home purchase. Also, the purchase is assisted by your real estate agent who will take the appropriate action to prepare and submit your offer.
Low down payment – many of the HUD homes offered for sale are likely to be eligible for borrowers to use the FHA loan. If applicable, this type of loan is very appealing for first time buyers because the down payment is very low at just 3.5%. However, this may be higher for would-be buyers that don’t have the most appealing credit history.
Closing costs – a further saving is the fact HUD will cover up to 5% of the closing costs. Additionally, if the home is in need of repairs, there may be the option to apply for a mortgage with a repair loan package built in.
Time savings – the process of buying and moving into your home can be completed in a relatively short period of time. HUD homes combined with an FHA loan will progress very quickly. The properties listed on the HUD home store site have already been through the appraisal stage, so there is less to deal with before completion.
On average, the buyer looking to exchange on a HUD home should expect the offer to be accepted and the property closed within a period of 30 days. However, in certain situations an extension may be required. If this is the case, HUD will confirm in writing to explain the extension. A typical reason for an extension is to give the lender extra time to process the paperwork and loan application.
When no extension is required, the turnaround time is relatively quick for buying a home compared to many of the alternative options.
Negatives of applying for a HUD Home
Beyond the wide-ranging benefits of a HUD home, there are a few negatives that should be carefully considered at the time of making the buying decision.
Here are a few of the negatives:
Purchase as is – one of the first negatives to mention is the fact the HUD home must be purchased as is. This is no agreements or guarantees given on the condition on the property.
It is quite common for the foreclosed home to be in need of a few repairs or maintenance. Some homes may simply look aesthetically neglected and in need of a little clean up, while others will be in need of substantial work to the electrics, foundation or roof.
Waiting period – if a problem is brought to your attention during the waiting period, there is still an obligation to proceed with purchasing the property. Any potential homeowner that makes the decision to back out at this late state is liable to lose the money already spent to reserve the property. This is likely to include any down payment and offer money.
Whether the HUD home is the most appropriate for you and your family will come down to your individual situation. Many first-time buyers have no problem with buying a home in need of a little attention. Investing in a home that needs a makeover is a perfect opportunity to not only save money, but also to style the home to match the specific tastes.
In summary,
If you are trying to decide on whether or not to buy one of the homes on the HUD home store site, this helpful guide will give you plenty of information to take the necessary steps to make owning a home a reality. There are plenty of benefits to be enjoyed from using this particular program. Most of the homes are likely to be within the more affordable price range which helps to give access to the flexibility of the FHA home loans.
Buying a property is a big commitment so you really want to spend the necessary time to research the short-listed homes to ensure it is really what you want.