Many people looking to score a deal while house hunting choose to consider including HUD homes in their searches. There are a lot of perks in going this route, but only if you truly understand the process.
So what exactly is a HUD home? In the simplest of terms, a HUD home is a property owned by the U.S. Department of Housing and Urban Development (HUD).
How does a house become a HUD home? Long before a home becomes the property of HUD, it typically was owned by a regular homeowner who’d made this purchase with an FHA (Federal Housing Administration) loan. If the owner ends up unable to pay the monthly mortgage, he or she ends up in foreclosure on the FHA loan, which means the home goes to HUD, who then must figure out how to unload this real estate and make back its money.
HUD doesn’t want to own these foreclosed homes any longer than it needs to, so these homes are priced to move, often below market value. Plus, the government agency offers special incentives to buyers in certain markets to sweeten the deal on a HUD-owned home.
One example of this that we’ve discussed before is the “Good Neighbor Nextdoor” program, which offers HUD homes in revitalizing areas at a 50% discount to community workers such as teachers, police officers, firefighters, and EMS personnel, who plan to live in the property for at least three years.
Other HUD perks:
- Low down-payment requirements or sales allowances you can use to pay closing costs or make repairs on the HUD home—not to mention, FHA financing options. So be sure to inquire with your real estate agent about the unique home-buying possibilities – the HUD route could be an even better bargain than how it first seems.
- Another bonus for home buyers is that HUD gives preference to owner-occupants who intend to live in the home for at least three years, so odds are good you’ll beat out investors as well.
Despite what you may have heard, HUD homes can be a great value and aren’t much more complicated than traditional sales. If you’re ready to start checking out HUD homes in the Denver area, contact Metrowest. We specialize in these types of sales and would love to help you through the process!