Tuesday, September 20, 2011

What is a HUD Home?

Having trouble acquiring your own property because of the skyrocketing real estate prices? Opt for a HUD Home instead. You can get one with as low as 3.5% down payment and minimum credit score prerequisite. An HUD home is a property acquired by the government’s Department of Housing and Urban Development. HUD owns these properties when a Federal Housing Administration (FHA) mortgage loan borrower fails to fulfill his payment duties.

HUD properties are then marketed by several Marketing and Management (M&M) contractors in the country. The details of the housing offer are posted online and the house is available for bidding. Only HUD-registered brokers can submit a bid for an interested buyer. HUD homes are intended for owner occupants who have no history of HUD property purchases in the past two years and commit to living in the residence for a minimum of one year.

There are special programs that offer HUD homes in discounted rates. For example, there is the Good Neighbor Next Door Program (GNND) which offers a 50% slash off the original price in revitalization areas for interested buyers who have the following occupations: police officers, elementary teachers, emergency medical technicians, and firefighters.

One advantage in getting an HUD home is the 203k rehab loan. You can acquire a loan that is higher than what you paid for the property and use the excess cash for home improvement and repairs. You can now paint the whole house and add a few carpets if you want.

Another advantage is the quality of your neighborhood. You are assured that the majority of your neighbors are real owner occupants and not investor buyers because HUD offers the properties to homeowner buyers first. There are two kinds of real estate buyers: owner occupants and investor buyers. Investor buyers just purchase a property with pure business in mind. They will not take of the property. Owner occupants on the other hand, will take care of the place and preserve its beauty.

There is a bid deadline for the properties. On regular estate sales, you can simply give your offer and the brokers will respond to you after the end of the bidding process if you get the property. If unsuccessful, you will hear nothing from them. With HUD sales, you will be informed if your bid is accepted or even if it is not. If you win the bid, you must send a certified check within 48 hours or else the house will be returned to the market.

The big challenge when you plan to buy an HUD home is finding one before someone else buys it first. Since the prices of these properties are way below the market value, these public homes are sold fast. HUD bidding lasts maximum of nine days only. If interested, you need to confirm everyday if the property you want is still available.

If you really want to avail HUD housing, ask help from a real estate broker with HUD registration. The broker will be able to keep you updated with the latest offers, news, and advice. He will also tell you if your bid has been accepted within 24 hours after you passed your offer.