Where do HUD Owned homes come from?
- • FHA, or the Federal Housing Administration, is part of the Federal Government's Department of Housing and Urban Development (HUD). FHA helps homebuyers qualify for mortgage financing by offering lenders insurance against homebuyer default.
- • When a homebuyer defaults on an FHA insured mortgage, the lender may foreclose and take ownership of the home. The lender then transfers ownership of the home to FHA in exchange for FHA paying the lender the balance that was due on the mortgage. FHA sells tens of thousands of foreclosed properties each year using the expertise of industry experts such as Sage Acquisitions.
Who can purchase HUD Owned homes?
- Home owners (owner occupants) and Investors can purchase a HUD owned home. However, during the initial listing, owner-occupants get priority.
- Investors cannot submit a bid anywhere from 5 to 16 days after being placed on the market depending on the FHA insurability of property.
- HUD defines an owner-occupant as someone who will be living in the home as their primary residence for at least 12 months and have not purchased a HUD-owned home within the past 24 months as an owner-occupants.
- HUD defines an investor as a purchaser who is not going to live in the home as their primary residence.
How do I see a HUD Owned home I am interested in purchasing?
- You can contact any licensed Realtor registered with HUD to show you a home. You can also contact Ring Real Estate at 937.378.3800 and an agent will be happy to assist you.
How do I buy a HUD Owned home?
- The first step is to get pre-qualified for a loan. By getting pre-qualified you know how much you can afford and what type of properties you can purchase.
- When getting pre-qualified, shop for a lender and loan that best meets your financial needs. If you need information on lenders in your area, please contact one of Ring Real Estate Realtors at 937.378.3800 for more details.
- Check out Home Buying Programs - Your lender usually knows about many local programs offered to first time homebuyers.
- In most cases you can use FHA loan financing to purchase a HUD owned home. Your lender still needs to qualify you for an FHA insured loan. Remember, FHA does not make loans directly to homebuyers. You must go through a lender. However, FHA financing is not required. Your lender can guide you through other available financing programs, including FHA. You can also purchase a HUD home with cash.
- HUD may have more attractive down payment terms on an FHA mortgage if a borrower is buying a HUD home. Check with your real estate agent regarding special terms or home buyer incentives available in your area.
- Find a qualified real estate agent to help you buy your home. Only a Registered HUD Broker can show and submit offers on HUD owned homes.
- A qualified real estate agent provides the best security for any buyer in ensuring a great home purchase.
What are the benefits of purchasing a HUD Owned home with FHA Financing?
- More attractive down payment terms with an FHA mortgage if a borrower is buying a HUD home.
- You can possibly borrow additional money to renovate and make repairs to the home through an FHA 203K loan.
- HUD will do a termite inspection and treatment if required at no cost to the Buyer if you purchase with FHA Financing.
- HUD will also stabilize lead based paint up to $4,000 if needed, before closing, if you purchase with FHA Financing excluding FHA 203K renovation financing.
Where can I find HUD Owned homes for sale?
Can I get a Home Inspection?
- HUD does not warrant the condition of its properties and will not pay for the correction of defects or repairs. Since the new owner will be responsible for making needed repairs, HUD strongly urges every potential homebuyer to get an inspection from a licensed professional home inspector.
- Once you have received your contract signed by HUD and you have obtained approval from HUD’s Field Service Management company.
- Inspections include but not limited to: Whole House, Termite, Septic, etc. and can be completed after HUD has signed your offer.
- Buyers are responsible to pay for any utility deposits required for turning on the utilities.
- If you are interested in acquiring a HUD Home that is in need of repair, you may want to apply for an FHA 203(k) Rehabilitation Loan. When a homebuyer wants to purchase a house in need of repair or modernization, the homebuyer usually has to obtain financing first to purchase the dwelling; additional financing to do the rehabilitation construction; and a permanent mortgage when the work is completed to pay off the interim loans with a permanent mortgage. Often the interim financing (the acquisition and construction loans) involves relatively high interest rates and short amortization periods. FHA's 203(k) Rehabilitation Loan is designed to address this situation. The borrower can get just one mortgage loan, at a long-term fixed (or adjustable) rate, to finance both the acquisition and the rehabilitation of the property.
Can I make repairs prior to closing?
- No work or repairs can be made to the property prior to closing.
- No access can be given unless the Buyer is accompanied by their Realtor.
- If the Buyer completes any repairs or begins work on the property PRIOR to closing, HUD can cancel the contract and retain the Buyer’s earnest money.