HUD Homes
What is a HUD Home?
A HUD home is a property that was previously financed with a FHAInsured Mortgage and the former owner defaulted on the loan. Themortgage company then submits a claim against the FHA insurance to HUD.HUD then pays the claim and the mortgage company subsequently deeds the property over to HUD. The property is then assigned to a managementcompany, where it is managed, marketed, and made available to newpurchasers.
How can I get a list of the properties "FOR SALE"?Contact Russ or Heather at (800)884-2414.
How can I get access to the property?Contact Russ or Heather at (800)884-2414.
How much earnest money deposit does a potential buyer need?For sales $50,000 and under, the earnest money deposit required is $500.For sales over $50,000, the earnest money deposit required is $1,000. Forvacant lots, the earnest money deposit required is 50% of the sales price.
How are offers evaluated?The highest full price net offer to HUD will be conditionally accepted, subject to verification. This does not constitute a formal acceptance of the offer. The formal acceptance does not take place until all parties havesigned a Sales Contract.
Is there financing on HUD properties?Yes, the properties can be financed under the FHA 203b mortgage program.This financing program is only available if the property meets minimumproperty standards, or if it is sold with repair escrows that are less than$5,000. If the repairs on a property are $5,000 or greater, the propertycannot be financed under the FHA 203b mortgage program. This means thatthe loan is uninsurable and the property can only be offered for sale in "as-is" condition. There is, however, a mortgage program available forowner/occupants only known as FHA 203k. This program allows owner/occupants to finance the cost of repairs necessary to have theproperty meet minimum property standards. If the property is sold in "as-is"condition, then only FHA 203k, or some other source of private mortgagefinancing can be used to purchase the property.
What is the downpayment requirement for FHA financing?For properties financed under the FHA 203b financing program, the totaldownpayment, on a HUD home being financed by an owner/occupant, is 3%of the sale price. Any investors wishing to obtain FHA financing will berequired to have a downpayment that is 25% of the sale price.
Can a buyer finance their closing cost?Yes, HUD allows the buyer to fund into their mortgage MIP, prepaid expenses and closing cost.
Are buyers permitted to have a home inspection?Yes, in fact, we encourage a home inspection for all HUD homes and wouldbe happy to assist you in finding someone to perform a home inspection.