Wednesday, September 26, 2012

What is HUD Home?

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A HUD home is a 1-to-4 unit residential property acquired by HUD (U.S Department of Housing and Urban Development) as a result of a foreclosure action on an FHA-insured mortgage. HUD becomes the property owner and offers it for sale to recover the loss on the foreclosure claim.

Who Can Buy a HUD Home?
Almost anyone (with valid SSN)! If you have the cash or can qualify for a loan (subject to certain restrictions) you may buy a HUD Home. HUD Homes are initially offered to owner-occupant purchasers (people who are buying the home as their primary residence). Following the priority period for owner occupants, unsold properties are available to all buyers, including investors.

HUD Homes are being sold in bidding process. Bids are accepted based on HUD's guidelines which include the highest net, not highest price.

Day 1 - 30 Owner Occupants only
Day 31+ Available for all bidders, including investors.

Uninsured properties have a 5 day owner occupant period and then go to daily and all bidders on day 6.

Owner occupant purchasers must occupy the property for 21 months and have not purchased a HUD Homes as an owner occupant in the past 24 months.

FHA Financing for HUD Homes:
  • IN - (insured) 203b with no MPS (minimum property standard repairs)
  • IE - (insured with escrow) 203b with repairs. Repairs must be less than $5,000. Repairs amount is determined by HUD and is financed b the Buyer (Buyer has to pay the repairs, added to loan amount)
  • UI - (uninsurable) property does not meet FHA guidelines) (6th day for investor)
  • UK - (uninsurable, 203K eligible) more than $5,000 in repairs and may qualify for 203K loan (6th day for investor)
Earnest Money:
  • $500 for purchase price of $50,000 or less
  • $1,000 for purchase price of $50,001 or more

Interested purchasing a HUD Homes? Contact me for more information.

 
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