What is a HUD home? A HUD home is a 1-4 unit residential property acquired by HUD (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.
What are the advantages of acquiring a HUD home? Aside from low prices and a great investment there are other advantages to purchasing a HUD property. In designated areas, HUD properties are offered at a reduced rate to law enforcement officers, teachers, firefighters, emergency medical techs, nonprofits and local governments (Good Neighbor Program). HUD homes are often the lowest priced homes on the market. Owner occupied purchases are given first priority over other offers. The down-payment is typically very low. HUD may pay up to 3% of your closing costs. A HUD home is available sooner for move-in because the appraisal has already been done.
If you have cash or can qualify for a loan you may be able to purchase a HUD home. Usually a HUD home is offered to owner occupied or non-profit purchasers but in the case where a HUD does not sell, they will also become available to investors.
Although HUD properties are purchased as-is, sometimes home repairs can be incorporated into the purchase price of the home. It’s always a good idea for buyers to have a professional home inspection done.
If you need a loan for your purchase, one choice may be an FHA 203(k) Rehabilitation loan. This type of loan allows the buyer to get just one loan that would include both the acquisition of the property and the rehabilitation of the property. This loan would be at a long-term fixed or adjustable rate. HUD does not provide direct financing. If you have cash or are able to finance a loan through a mortgage provider then you would be eligible to purchase a HUD property.
Currently, there is a small inventory of this type of home, but we are expecting more of these properties to be released to the market in the near future. If you are interested in acquiring a HUD property you can search our website or you can call our office at (714)525-0900. We have several experienced agents that can help you with your HUD purchase.
Remax North Orange County is a HUD approved Brokerage located in Fullerton, California. Our office has been selling HUD approved homes in the Southern California area for over twenty years.