MN Hud Homes
What is a HUD Home?
March 10, 2009 by Financemyhome · Leave a Comment
Hudhomes consist of one to four unit residential pieces of property that HUD owns due to a foreclosure on an FHA insured mortgage. Because HUD owns these properties, they want to recoup their losses on the foreclosure of the mortgage. HUD homes can be purchased by anyone who is interested in the property and these government homes can be purchased through brokers who are registered with HUD to sell these foreclosed homes.
Due to the economy, repo homes are on the rise and while these HUD homes do give the opportunity for the owner to try to buy the home in full, when this fails, the HUD home goes on the market for sale to the general public and investors. Purchasing a HUD home is a great investment for people that can turn around and sell the home and make money on that investment.
To explain further, when a property is a foreclosed home by HUD, because they insured the loan or mortgage on that home, they own it and can now re-sell it. Foreclosed homes sold by HUD are sold at market value price based on what the going rate is for similar homes in the area. This is definitely a buyer’s market with so many repo homes out there and many of them are HUD homes.
If you find a hudhome that you are interested in, ask your local real estate broker if they are registered with HUD to sell their foreclosure homes and have them make an offer on your behalf. Often, HUD will even pay the real estate broker’s commission if it’s written into the contract, so make sure you ask for that.
An incentive program offered by HUD is for properties in certain areas that are available at a reduced sales price and are earmarked for law enforcement, teachers, firefighters, emergency medical technicians, nonprofits, and local governments. If you are one of these people or organizations, a HUD home may be right for you.
Many people think that they must have cash to buy a foreclosed home. This is not the case. If you have cash or can qualify for a mortgage, you are qualified to buy a hudhome. Because HUD homes are sold on an “as-is” basis, they don’t come with a warranty and HUD does not pay to correct problem.
That doesn’t mean you still can’t have an inspection on a HUD home before you commit to buy. You can still request an inspection at your own cost to see if the HUD home you are interested in has major or minor repairs and how much you may need to make improvements to the home. Often hudhomes are older and may have building or paint materials that need to be upgraded.
HUD homes can be a great value for a new family, a family that is looking to upgrade to a larger home, or for investment purposes. Ask your real estate broker to check out hudhomes available in your area and make a trip to see some of these repo homes.
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