If you’re prepared to put a little work into your first or next home, HUD properties can be a great option. Considering these types of homes can also be ideal in areas where inventory is on the low side. While it’s not exactly the same as purchasing a traditional home, buying a HUD property isn’t necessarily difficult, but it’s a good idea to ask yourself a few questions before taking the plunge.
First, what exactly is a HUD home?
HUD stands for the U.S. Department of Housing and Urban Development. A HUD home is a home in which the owner had an FHA-insured mortgage but was unable to make the mortgage payment and went through foreclosure. FHA loans are insured by the government. If a borrower defaults on an FHA loan, the Federal Housing Administration pays the lender the balance on the loan and takes possession of the property.
- Do I have a qualified real estate agent?
Only real estate agents who are registered with HUD can represent homebuyers in the HUD online auction process. A registered HUD agent can tell you how the home buying process works, how long they’ve represented buyers, whether they will accompany you to inspect properties, and what special knowledge he or she has gained from past experiences.
- Should I do a home inspection?
Because HUD homes are sold as-is, you could end up purchasing a home in need of repair. HUD typically does not warrant the condition of its properties nor does it pay for repairs. It does, however, urge potential buyers to get an inspection prior to submitting an offer.
- Is my financing and financial paperwork in order?
As you prepare for your HUD home purchase, work on getting pre-qualified for a loan ahead of time. This not only shows HUD that you’re a serious buyer, but it allows you to get a real idea of what you can afford to spend, taking into account any repairs that need to be made. Consider researching to see if you qualify for FHA financing or special FHA deals, such as the $100 Down Payment Incentive program or the Good Neighbor Next Door program.
Are you considering checking out HUD homes in the Denver metro area? Remember your first step is finding an experienced agent. Metrowest specializes in these types of sales and would love to help you start the process. Give us a shout today!