How Do I Buy HUD Properties?
FHA-insured loans permit higher-risk borrowers to purchase homes. The lenders’ investment from the houses purchased with these borrowers is protected by the insurance — if a borrower defaults on the loan also goes into foreclosure, the Federal Housing Administration pays the lender an insurance benefit. In return, the lender transfers ownership of the property to the Department of Housing and Urban Development, or HUD, which takes ownership and lists the property available. Bidding on HUD properties is similar to bidding on other foreclosures.
Secure a mortgage pre-approval from a direct lender if you are not likely to pay money. Any sort of mortgage loan may be used for the purchase of a HUD home, such as an FHA-insured loan.
Find a real estate agent to represent you. Prospective buyers of HUD properties must submit their supplies through a broker. It is a good idea to utilize a broker anyway, as sales transactions can be complicated. Your probability of a successful closing increases.
Look for the HUD Home Store to find HUD properties available. The Home Store is a database of HUD houses you can search by geographical location, price, size, number of bedrooms and bathrooms along with other standards.
Speak to your representative you’d like to see. Choose the one that you’d love to bid on.
Work with your agent to determine how much you will offer and exactly what terms you will request on the arrangement of sale — the arrangement will be the sales contract, including the foreclosure addendum with the seller’s terms.
Obtain a cashiers check from your bank. Submit your own mortgage pre-approval along with it to your agent. She’ll send your agreement of sale along with these records to HUD’s list agent. These items represent purchase offer, or your bid. The contract goes into effect when HUD takes your offer, its own representative signs the contract, and HUD’s agent conveys approval to your agent.