The US Department of Housing and Urban Development maintains an inventory of foreclosed homes that are offered for sale to the public. If you're looking for a first home, or an investment property, a HUD owned home can be a good investment.
Buying HUD Owned Homes: What You Need to Know
HUD, the agency overseeing FHA, offers foreclosed homes for sale to the public; these homes are sold in as-is condition and are not warranted against defects, damage, or problems that may occur after the sale. There are a few things you should know about buying foreclosed properties, including how to avoid scams.
- HUD homes are offered for sale through licensed real estate professionals approved by HUD: Don't waste your money paying for lists of foreclosed homes, or for learning "systems" that "guarantee" your success in buying and selling foreclosed homes. You can browse HUD/FHA homes for free online.
- HUD homes are sold near market value: HUD doesn't give away its homes at deeply discounted prices. The more highly discounted homes require renovation or repair, so investing in a professional home inspection before buying is recommended.
- HUD doesn't offer direct home loans: If you're buying a HUD home, you can pay cash or get an FHA mortgage through FHA approved lenders. FHA does not function as a mortgage lender, but it does guarantee mortgage lenders against losses on home loans made through its programs.
- Financing renovation and repair: FHA 203(k) loans can be a great way of financing your purchase of a HUD/FHA home. These mortgage loans provide funding for the home purchase and additional funds for completing repairs and renovation. Buying a HUD/FHA home with an FHA 203 (k) loan is a great way to buy investment properties an can also help owner occupant buyers find, finance, and fix their next home.
- Check out local home buyer and redevelopment assistance programs: Certain neighborhoods are eligible for additional assistance through HUD and local redevelopment agencies. Real estate pros and FHA approved lenders can provide details about programs available in your area.
Buying a HUD owned home can provide opportunities for first time buyers, and those handy enough to perform needed repairs and maintenance.
Karen Lawson
Karen Lawson is a freelance writer with extensive experience in mortgage banking and home loan loss mitigation programs. She holds BA and MA degrees in English from the University of Nevada, Reno.
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