Investing in HUD real estate foreclosures is a great way for people to pick up homes at bargain prices. 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. The process of buying a foreclosed HUD home varies from a conventional sale in a couple of ways, so here’s what you’ll want to know before you venture down the HUD real estate path.
FHA will waive the required minimum down payment of 3.5% in favor of a measly $100 when you make a full price offer on any HUD-owned foreclosure. These lower-priced, single family homes are bound to be foreclosures, so I’d simply contact the realtors for some of those listings in my preferred zip code and ask them to send me info on foreclosed homes for sale in my area.
HUD foreclosures are properties that have been repossessed by The US Department of Housing and Urban Development due to payment defaults on the mortgage by the previous owners. HUD mortgagee letter 2015-17 allows the responsibility of determining escrow amounts solely to the loan underwriters.
The real estate agent will also be able to walk you through the various steps of financing this type of house. The bid package contains instructions, a sales contract, a Forfeiture of Earnest Money Deposits” document and an addendum regarding lead-based paints.
Find this out before you place your bid, or you could find yourself without a loan, without a home, and without your earnest money deposit. The HUD foreclosed home has been assigned to a Marketing and Management Contractor to service and market the property. The auction process in Foreclosed HUD Homes is similar to any other auction and the bidding process requires participants to bid for the property.