If you have ever been in the market for a new home, it is likely that you have come across the phrase "HUD Homes" more than a few times while doing your research.
But what are HUD homes? What are the benefits of purchasing one? And who is eligible to take advantage of the great real estate deals?
Many people confuse the terms "foreclose" and "HUD," thinking that they are mutually interchangeable. Although this is partially correct, it is misleading and not entirely accurate.
While HUD homes are always foreclosed homes, foreclosed homes will not always be HUD homes. This distinction should not be ignored. Furthermore, you should keep always keep it in the back of your mind as you continue your search for an affordable new home.
HUD is an acronym that represents the United States Department of Housing and Urban Development. HUD homes tend to be single-family properties, but can include residential properties of up to four separate units. HUD acquires these properties as a result of foreclosures brought on by failed Federal Housing Administration (FHA)-insured mortgages.
Unlike typical homes that have been foreclosed on by a bank or other lending institution, the government owns HUD homes. However, the process of purchasing a HUD home is similar to that of a traditional foreclosure purchase.
In other words, these houses will still be offered at very appealing discounted rates, and the process is sped up to ensure quick and easy transactions.
It is these features that represent the primary benefits of purchasing HUD homes, as these transactions are both financially responsible and time efficient.
Almost anyone has the opportunity to purchase a HUD home, assuming you are financially able. Further discounts on HUD homes are available to those who have suffered as a result of special circumstances such as hurricanes or other natural disasters.
Preference is given to those who intend to not only buy, but also live in the homes. After an initial priority period, secondary consideration is given to all remaining buyers, including investors who don't intend to live in the properties they purchase. Although there are multiple advantages to HUD homes, there are some disadvantages to this option, too.
For example, HUD does not provide home inspections to ensure the living conditions of its properties. The new owner will be responsible for discerning the state of an available home, as well as be responsible for making any necessary repairs or improvements.
Because the homes available through HUD have likely seen rough financial times, it is highly recommended that you do arrange a home inspection before going through with the purchase to ensure a safe and comfortable new home.
Additionally, HUD will not help you finance your new home purchase. All financial issues must be dealt with privately through personal means or by way of a bank, creditor or other loan providing institution.
Some people may qualify for an FHA-approved loan, but all the steps necessary to acquire one must be initiated by the interested purchasing party.
If you are interested in looking at HUD homes available in your area, you are in luck. There are numerous resources available to allow for the easy location of these properties, including specialized firms and agencies, Internet resources and through HUD directly.