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Question 1: What is a "HUD
Home"?
Answer: When someone with a HUD insured
mortgage can't meet the payments, the lender forecloses on
the home; HUD pays the lender what is owed; and HUD takes
ownership of the home. Then we sell it at market value as
quickly as possible.
Question 2: Who can buy a HUD home?
Answer: Anyone! If you have the cash or
can qualify for a mortgage, you can buy a HUD home. HUD
employees and relatives of HUD employees are eligible, but
must receive written approval from the Director of HUD's
Office of Single Family Asset Management in order to
purchase a HUD-owned single family property.
HUD employees
should refer to paragraph 10-29C of Handbook 4310.5, REV-2,
Property Disposition Handbook-One to Four Family Properties
for the exact requirements to purchase a HUD-owned single
family property.
Question 3: Are HUD Homes meant for people
with low incomes?
Answer: HUD homes range in price, but most
are affordable for low- and moderate-income Americans.
Question 4: Is it true I can get a HUD
Home for a dollar?
Answer: No. HUD sells homes at market
value - that means that the price is set based on the price
of similar homes sold in the area.
Question 5: If the HUD Home needs
repairs, will HUD make them?
Answer: HUD Homes are sold
"as-is," without warranty. That means that HUD
will not pay to correct any problems. But even if a HUD Home
needs fixing up - and not all of them do - it can be a real
bargain!
For example, HUD's asking price on the home will
reflect the fact that the buyer will have to invest money to
make improvements. HUD might offer special incentives such
as an allowance to upgrade the property, a moving expense
allowance, or a bonus for closing the sale early. And keep
in mind that on most sales, the buyer can request HUD to pay
all or a portion of the financing and closing costs.
Your
real estate agent will have details. We encourage you to get
the home professionally inspected before you make an offer
so you will know what repairs you may have to make BEFORE
you submit your bid.
Question 6: How do I buy a HUD home?
Answer: Start by finding a participating
real estate agent. Your real estate agent must submit your
bid for you. Normally, HUD Homes are sold in an "Offer
Period." At the end of the Offer Period, all offers are
opened and, basically, the highest reasonable bid is
accepted. If the home isn't sold in the initial Offer
Period, you can submit a bid until the home is sold.
Bids
can be submitted any day of the week, including weekends and
holidays. They will be opened the next business day. If your
bid is acceptable to HUD, your real estate agent will be
notified, usually within 48 hours.
Question 7: If my bid is accepted, then
what happens?
Answer: Your real estate agent will help
you through the paperwork process. You'll be given a
settlement date, normally within 30-60 days, by which you
need to arrange financing and close the sale, or forfeit
your earnest money deposit, or pay for an extension of your
sales contract.
We have an excellent booklet to help you
understand the settlement process: "Buying
Your Home - Settlement Costs and Helpful Information
When you buy a HUD Home, the selling agent's commission will
be paid by HUD but only if you make this a condition of your
offer. The listing agent's commission is always paid by HUD.
HUD will pay a total sales commission of up to 6%.
Question 8: How can I find out what HUD
Homes are for sale?
Answer: Right here! We update our lists of
HUD
Homes for sale every day. If you see one that interests
you, contact one of the real estate agents in your area who
shows HUD homes. They can help you from there.
Question 9: How can I get a loan to buy
a HUD Home?
Answer: HUD doesn't make loans directly.
But we do have a number of mortgage insurance programs that
could help you buy a home. You can read about those programs
here. Then contact a HUD
approved lender, who will take you through the steps and
actually make the loan.
Question 10: Can I buy a HUD Home as an
investment?
Answer: Most HUD Homes are initially
offered on a priority basis to owner occupant purchasers
(people who are buying the home as their primary residence).
Following the priority period, unsold properties are then
available to all buyers, including investors.
Question 11: Is there anything else I
should know about HUD Homes?
Answer: We encourage every homebuyer and
homeowner to be a wise consumer, so be sure to read our consumer
information. Houses built before 1978 may have lead-based
paint, which can cause harm to your family; so be sure
to read about this hazard and about what you would need to
do to correct it. Teachers
and law enforcement officers qualify for 50% discounts
in certain situations.
HUD Website: www.hud.gov
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