We get many questions in reference to HUD Homes. The main one is “What exactly is a HUD Home?”  Simply put, a HUD home is a home that has been deeded back to HUD/FHA by mortgage companies who had foreclosed on FHA-insured mortgages in return for mortgage benefits.

These can be a single family or any other type of residence that has been foreclosed on and deeded back to HUD/FHA.  These can be great bargains as HUD is looking to get rid of the property as fast as possible.
 
Almost anyone can purchase a HUD home. 

There are mortgages available for them (subject to certain restrictions) and even employees or relatives of HUD employees are eligible (if you are, you must receive written approval from the Director of HUD's Office of Single Family Asset Management in order to purchase a HUD-owned single-family property. HUD employees should refer to paragraph 10-29C of Handbook 4310.5, REV-2, Property Disposition Handbook-One to Four Family Properties for the exact requirements to purchase a HUD-owned single family property. Other less common restrictions may apply.) 
 
There is a myth that HUD homes can be purchased for as little as One Dollar.  The truth is that HUD sets the price based on similar homes sold in the area.  Regardless, this means that most of the homes are affordable to low and moderate-income families.
 
An important thing to remember is that HUD homes are sold “AS IS” and there is no warranty.  If a HUD home needs repair, then HUD will adjust the asking price to take this into account.  However, HUD might offer special incentives such as an allowance to upgrade the property, a moving expense allowance, or a bonus for closing the sale early. 

Another advantage is that frequently, the buyer can request that HUD pay all or a portion of the closing costs.  Where do you find that out?  Your Real Estate agent should be able to provide you with that information. 

As with any purchase of a new home, you should have the home inspected before you make your offer on the property.  That way, you will know what is going to have to be fixed before your bid is submitted to HUD.
 
The process for purchasing a HUD home is a little different from a regular home. 

Your first step is to locate a real-estate agent that participates in the HUD program. 

The bidding is also a little different.  Generally, HUD Homes are sold in an "Offer Period." During this time all the bids are examined and the highest reasonable bid during that period is accepted.  

If for some reason the home doesn’t sell in the initial offer period, then you can keep submitting bids until the home is sold. 

If HUD does accept your bid, then HUD will notify your real-estate agent in about 2 business days.
 
Once your bid is accepted, your real estate agent will help you fill out all the necessary paperwork and you will get a settlement date. 

This date is usually in 30 to 60 days and you will need to secure your financing and close the sale. 

If you don’t, then you either have to pay for an extension of your sales contract or you could lose your earnest money deposit. 

One thing to be aware of when making your offer, is that the selling agent’s commission will be paid by HUD only if you make this a condition of your offer.  The commission for the listing agent is always paid by HUD and they will pay up to a total sales commission of 6%. 

For more information, there is a booklet available from HUD regarding the settlement process called “Buying your home- Settlement costs and Helpful information". You can get it by going to www.hud.gov.
 
Often we get people looking for HUD homes that they want to use as an investment property.  This can be done! 

However, most HUD homes are initially offered during the offer period on a priority basis to people who want to make the home their primary residence. 

If after that period the home remains unsold, then it is available to all buyers. 

So just remember that if you are looking to purchase the home as an investment property, people who want to buy the home as a primary residence will be looked at first until the offer period ends.
           
So, now you are ready to take the next step and locate yourself a HUD home and get financing. 

Where do you find a list of HUD homes? 

Well, that’s the easy part. 

HUD has a listing that updates every day.  If you see something that you like, then contact a HUD real estate agent and they can get you started. (You can find that list here.)
 
Financing is almost as easy!  We do that!  

As a broker we have access to many approved HUD lenders. 

We can find you the best program available for you. 

Fill out our Quick Quote form and just mention in the notes section that you are looking for a HUD home and we will contact you to discuss your financing options. 
 

If you need more information, it can be found at http://www.hud.gov/ 

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Eagle Nationwide Mortgage Company - 255 Wall Street - Kingston, NY 12401
Office Phone: 845-331-2577 Fax: 845-331-3205 Toll Free Phone: 866-999-4099

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