Hud Homes Deserve Your Consideration

There is HOPE After All !

What is a HUD Property, and Why You Should Pursue Owning One ?

Benefits of Buying an HUD/FHA Foreclosure

* Low money down.

* No Appraisal required

* Instant equity

* Flexible Credit requirements

* HUD will pay all closing costs. (Up to 5%)

HUD Foreclosures Explained

If the house you are interested in is a Housing and Urban Development (HUD) foreclosure,

then it was last purchased with an Federal Housing Administration (FHA) mortgage.

The Federal Government insured the loan, making the previous FHA loan

possible. By insuring the loan the Federal Government agrees to repay the Lender for

all money lost by the lender in case the property is foreclosed on. It’s a good deal for

the Lender as their investment is 100% insured.

Private Mortgage Insurance (PMI)

The Federal Government protects itself by collecting on each transaction of a federally financed

property a Mortgage Insurance Premium (MIP) at the time of purchase. The MIP is a percentage of the

mortgage amount and is helpful in several ways

Because the MIP is charged, the FHA can allow a purchaser to reduce their initial

out of pocket cash expenditure from

5% to 3.5% of the purchase price, making it possible for many more Americans to buy

homes. HUD reports in their mission

statement that home ownership for the majority of Americans is their goal and that

has proven to be the driving force behind their decisions and directives since their

inception.

The MIP is pooled with all the other premiums and allows the Federal Government to

continue helping home buyers save money on their homes by keeping the costs down for

home buyers.

Most importantly to you, the MIP paid by all the prior home owners, and allows HUD to sell the

foreclosed inventory presented by HUD at a substantial discount.

Each property has it’s own financing options. For the best information on a purchase

strategy for the particular property

you are interested in, visit website:http://hud1.towerauction.net/CA.htm

How to Purchase a HUD Home

Recent changes and NEW Services available to help you buy foreclosures

The New Millennium brought us many changes to the way sells homes as has moved toward privatizing its effort to sell its foreclosed homes in inventory. As a result, you can now find a list of Homes on the internet, pick one out that you like and buy it … right? Well not exactly, but we will give you some specific pointers to getting through the maze and the myths.

First of all, you should know that a home becomes a Home because someone that had an FHA Insured loan, defaulted on that loan and was foreclosed by their lender. The lender in turn collects from FHA (Federal Housing Administration) any losses they incurred from foreclosing. FHA is part of HUD(Housing and Urban Development). in turn eventually gets the deed to the property and offers it for sale to the general public

The reason lenders can recover their losses is that everyone, yes everyone who gets an FHA Insured loan pays what is called “mortgage insurance”. These insurance premiums show up on your settlement sheet as an initial premium, which is usually added to your loan amount and then an additional monthly premium is added as part of your mortgage payment. These premiums go into a fund to pay off lenders.

Now that you know how a home becomes a HUD Home, you need to know that it takes 3-6 months for HUD to get the deed and try to evaluate and sell the home. All the while the home is usually vacant; this total time frame could easily be several months from the date of foreclosure.

All these and more are reasons that they sell homes strictly on an “AS-IS” basis.

Homes typically have been vacant for an extended period of time often without any utilities turned on. However, home inspections should be conducted to see for yourself exactly what the condition, is so that you go to the settlement knowing what to expect from the home and what repairs will be needed.

Remember, Homes are sold in As-Is condition. If the repairs needed exceed $5,000 HUD has a program to lend you the money, its called FHA 203k rehab loan program. HUD wants you to use a real estate agent to help you use their contracts and forms to submit contracts if your bid is accepted. You can find the property list online at: http://hud1.towerauction.net/CA.htm. Take your time reading the screens and you will be able to select your state and view your particular listings.

This is important because you need to know that the basic property standards are in fact very minimal. Do not give up on your right to a home inspection just yet. First, take a look at the minimum property standards (a link is provided for you by HUD.gov).

I have done this many times for clients and it works very well, if your “Rehab team” helping you, knows what they are doing. An experienced real estate agent as well as a lender experienced in the processing of FHA 203k loans will help save you time and money. The interest rates and the amount of loan discount points is usually a little higher than a standard FHA loan, but you can often buy these properties at significant below market prices if you are willing to put up with the higher fees and the hassle of fixing them up.