All buyers want to find a good deal on a home, so many go the route of purchasing foreclosure homes. Therefore HUD homes for sale are very popular for many buyers. Not only are they usually priced below market, but there are also great loan options. The official name for FHA foreclosures is HUD REO Property. Basically this means FHA, which is HUD, has foreclosed on a property and is now offering it for sale. Also they may be known as a HUD home or HUD owned home. The Secretary of HUD is the seller. By offering it for sale, HUD is looking to recover the mortgage insurance claim paid to the original mortgage lender.
Are you wondering how to buy a HUD home? We are a HUD approved lender offering several mortgage loan options to purchase HUD foreclosures. Available home loans include FHA, HUD Repair Escrow, HUD $100 Down, plus other affordable loans. Also buyers could pay cash. Typically a reasonable cash offer is tough to beat as it is a quicker loan. But buyers with the highest bid with acceptable financing may still win the contract.
HUD Homes Mortgage Loan Options
If you are considering the purchase of a HUD owned foreclosure, we have many options. But keep in mind that the condition of the property may determine the loan type. First of all, if the home is in good condition then any type of financing should be available. So if a Veteran, service member, or surviving spouse, a VA loan is a great no money down option. The down payment depends on the buyer’s available entitlement. Another great option includes USDA which is also a no money down mortgage. Plus USDA allows for financing closing costs if the home appraises over the purchase price!
Then there are the HUD / FHA programs! FHA has advantages to buying HUD homes for sale. If the property meets minimum property requirements (MPR), a regular FHA works great. There would be a low down payment plus other benefits. FHA loans allow gift funds for down payment, non-occupying coborrower, and flexible credit guidelines.
Then there are specialty HUD programs which include HUD $100 Down, Good Neighbor Next Door, and HUD Repair Escrow. Each have advantages. But in order to use these programs, the property listing must specifically state property eligibility. Keep in mind that many lenders don’t offer all of these HUD loan options. The HUD $100 Down program allows buyers to bring as little as $100 in down payment. Although the Good Neighbor Next Door program allows for a 50% down payment assistance, there often are few properties available and fewer lenders which allow the program. As with many foreclosures, many of the HUD owned homes are in need of repairs. That is where the HUD Repair Escrow mortgage has advantages and we offer the program!
HUD REO Repair Escrow Highlights
The HUD REO Repair Escrow loan allows for buyers to purchase a foreclosure home. In addition required repairs are allowed to be financed into the loan as well. Although keep in mind that this program is only available for eligible HUD owned properties. The home listing must state that the property is eligible for the HUD REO Repair Escrow program. Details include the following.
- Requires repairs
- Typical repairs total $10,000 or less
- Repairs may be completed after closing
- Escrow account is created for repairs
- HUD-9548 form completed
- HUD paid closing costs are allowed
- Does not have to be a first time homebuyer
- Must be a primary residence
Free Listing of HUD Homes for Sale
So does buying a HUD foreclosure sound good? As always, it is best to get preapproved for a mortgage first. Even if you contact a good Realtor, the agent would instruct you to get approved up-front. Once prequalified, we can introduce you to Realtors that work with HUD owned properties. A negative of purchasing a HUD home is the paperwork and a contract over 200 pages is common. Therefore an experienced HUD Realtor is key in negotiating and completing these transactions. You can take a peak at HUD homes for sale by clicking the button above. It will take you to HUDHOMESTORE. But a HUD experienced Realtor can give you a free listing of HUD homes for sale or other foreclosure homes as well.