If you’re house hunting in Denver, chances are you’ve come across properties listed by HUD. These types of homes can turn out to be a great deal if you understand what they are and the process of purchasing them. Let’s start with the basics: HUD stands for the U.S. Department of Housing and Urban Development. A HUD home is one 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, and if a borrower defaults on an FHA loan then the Federal Housing Administration pays the lender the balance on the loan and takes possession of the property.
The government doesn’t want to hold on to these homes any longer than necessary, so they often sell them below fair market value.
Advantages of buying a HUD home
Besides getting a good deal on the price of HUD properties, they come with several other benefits:
- HUD paid closing costs up to 5% of the purchase amount.
- HUD homes are already apprised by an FHA approved appraiser so you may be able to close faster if using an FHA loan.
- You may be able to get up to 3% of your down payment paid for.
- HUD loan programs are available.
- Low earnest money deposits ($500-$1000)
- Preference is given to buyer purchasing as a primary residence over real estate investors.
Financing options for HUD homes:
1) One Dollar Program
The one dollar program from HUD is available to local governments to purchase and offer to low-income families or as public housing. Single-family properties are made available through the program whenever FHA is unable to sell the homes for six months.
2) Good Neighbor Next Door Program
If you’re a police officer, fire fighter, emergency service employee, or a teacher you can buy a HUD home for a great price. It’s called the good neighbor next door program this opportunity is for owner-occupied properties only.
3) Non-Profit Program HUD offers this program to non-profit faith-based organizations, such as churches. This program allows buyers to purchase a HUD-owned home to resell to low-income families and first-time homebuyers.
If you’re thinking of checking out HUD homes in Denver, the first thing you want to do is find an experienced pro to help you navigate the waters. At Metrowest, we specialize in this type of sale. Give us a shout today – we’d love to help you start the process!