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Jul 27

How To Buy A Hud Home

hud homeDid you know that the government has a stock of homes for sale at all times? Whenever a homeowner defaults on a federally backed loan, they repay the lender the amount lost and then sell the home at market, and sometimes below market prices.  They are called HUD Homes.

HUD stands for the Department of Housing & Urban Development. These homes are amazing investments for first time home buyers, because the government wants to sell these properties as quickly as possible. This means you can get significant discounts. Plus, HUD will sometimes help homeowners by providing up to 3% of closing costs.

Three Steps To Buy A HUD Home

Step 1: Start off by researching HUD homes on the HUD Home Store website. Just like you search for different books on Amazon, you easily navigate the site to find homes in your area. Then you filter out homes that do not meet your requirements. Do you need homes priced under $100,000 for a three bedroom, two-bath property in Illinois? Then put in $100,000 for a 3/2 property in the search. Not only can you find great discounts, but HUD has a number of homes on their list at any given time.

This is important, because you should explore what type of properties HUD has available. While you are not allowed to purchase directly off the site, unless you are a real estate broker, you need to have a good idea of what type of property you want to buy.

Step 2: Then contact your mortgage broker to make sure you can afford the property. Show the broker some of the properties on the HUD site you were thinking about purchasing to give them an idea of what type of home you want. This will help you to get a pre-approval from the lender.

If you do not do this, then your real estate broker will not work with you. They need to make sure that you are qualified to get the financing for your property.

Step 3: The last step is contact your real estate agent about any potential properties you are interested in purchasing. Show them the pre-approval letter from your mortgage broker. They will use this pre-approval letter when they submit the offer on the HUD home you want to buy.  At this point, your broker will start negotiating with HUD on your behalf. Because this is the government, they will negotiate a little on price, but then stick to their guns. The government will not be rushed into selling, so do not expect a large bargain on the price.

Once you have completed these steps, then you go through the normal buying process.

Buying The Right HUD Home

Buying the right HUD home takes patience. You need to be able to work with the government rules and regulations to find the right home for your needs. However, following the steps listed above will make this process more palatable. Keep your real estate broker and lenders information close, because they will can be a fountain of knowledge throughout the entire process. Let us know if you have any additional questions about how to buy a HUD home?

 

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