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Questions and Answers about HUD Homes.

What is a HUD Home?

A HUD Home may be a single-family house, a townhome, condominium or other type of residence. The properties were deeded to HUD/FHA by mortgage companies who had foreclosed on FHA-insured mortgage loans. Now HUD must sell these homes--as quickly as possible at market value--in order to obtain the maximum financial return on its mortgage insurance funds.

Who can buy a HUD Home?

Anyone who has the money or can qualify for the necessary amount of mortgage financing can purchase a HUD Home. You do not have to be low-income or meet any other such limitations.

Can I get a HUD Home for free, or for one dollar?

No. HUD acquires its properties through the foreclosure of FHA insured mortgages. One of HUD's many missions is to maximize return to the FHA insurance fund, which it does by selling the properties at fair market value.

How do I buy a HUD Home?

Our policy is to market acquired properties on a competitive basis with sealed bid offers being submitted through any participating licensed real estate broker. Local brokers will assist you in the transaction. They can show the property to prospective buyers, as well as answer questions and provide information on the location of parks, schools, shopping, and employment centers.

Are HUD Homes meant for low income people?

HUD Homes come in a variety of price ranges, though most are affordably priced, making them accessible to low and moderate income Americans.

What are the income requirements?

If you make a cash purchase, there are no income requirements. Otherwise, you must be able to qualify for a particular type of mortgage financing based on established mortgage lending criteria.

 

How does HUD Decide how much to charge for a HUD Home?

The listing price of a HUD property is HUD's estimate of its fair market value. HUD establishes value by comparing HUD properties to similar properties sold within the community in the previous six-month period.

Can investors purchase HUD Homes?

Yes. However, HUD offers its properties to owner/occupants for a period before making them available to investors.

What happens if I can't close the sale within the time permitted by HUD?

You'll probably have to pay fees for an extension of time, usually in increments of 15 days.

 

HOW CAN I FIND OUT INFORMATION ABOUT MY CREDIT HISTORY?

There are three major credit reporting companies: Equifax, Experian, and Trans Union. Obtaining your credit report is as easy as calling and requesting one. Once you receive the report, it's important to verify its accuracy. Double check the "high credit limit,"'total loan," and 'past due" columns. It's a good idea to get copies from all three companies to assure there are no mistakes since any of the three could be providing a report to your lender. Fees, ranging from $5-$20, are usually charged to issue credit reports but some states permit citizens to acquire a free one. Contact the reporting companies at the numbers listed for more information.

Credit Reporting Companies

 

Company Name Phone Number
Experian  1-888-524-3666
Equifax  1-800-685-1111
Trans Union 1-800-916-8800

 

 

Is there any way for me to get advanced notice about homes that will be coming up for sale?

No. The only way to find out about HUD Homes for sale is to look in the listings in your newspaper (if it carries HUD listings), or ask your broker.

Note: A WORD ABOUT LEAD-BASED PAINT.

HUD has initiated a nationwide effort to alert home buyersto the risk that older homes that may contain lead-based paint. Lead exposures can be harmful to young children. If you are making an offer on a home constructed prior to 1978, you should receive a copy of the EPA pamphlet "Protect Your Family from Lead inYour Home" from your broker. You will be required to lead-based paint, addendum with your offer on the HUD Home. You will be given the opportunity to conduct a risk assessment or lead-based point inspection (at your own expense) prior to being obligated under the contract.