When you are a low to moderate income earner, you may think that homeownership is an unachievable dream. You look at the houses for sale and think that you can never afford to pay for a house of your own.
However, you may be able to realize your dream when you take advantage of programs that are geared toward low and moderate income earners, as well as first-time homebuyers. To find out if the HUD homes for sale can suit your home buying goals, contact Carl Chapman REALTOR at West USA Realty to learn more about finding and buying HUD homes today.
What is HUD?
HUD is an acronym used for the Department of Housing and Urban Development. President Lyndon Johnson established this agency in 1965 with the goal of successfully combating poverty.
The president appoints a secretary to oversee HUD, which itself functions as part of the president’s cabinet. It utilizes a variety of programs and policies to help people who live in urban and poverty stricken areas gain equal access to quality HUD homes that are both affordable and inclusive. It also offers programs that are designed to help with community development and provide low income earners with rental assistance.
The secretary of this federal cabinet agency likewise oversees the Federal Housing Administration, or FHA, which operates as a division of HUD. FHA is a home buying program geared toward people who may not be otherwise qualified for traditional home mortgages. Specifically, it is a resource to assist potential buyers who earn lower incomes or have bad credit purchase HUD homes for sale.
HUD is accustomed to working closely with Realtors across the country in its bid to make available quality housing to first-time and low and moderate income buyers. When you are interested in the programs that HUD makes available or finding HUD homes for sale, you are encouraged to reach out to an agent like Carl Chapman REALTOR and West USA Realty, who are HUD approved and can explain more about this agency’s home buying programs at length.
More about HUD Homes
With this information in mind, you may ask yourself what is a HUD home and where can you find one for sale? In fact, you cannot find HUD homes for sale on any multiple listing service or MLS. HUD homes for sale are only sold at auction and not listed for sale like traditional homes for sale are.
They are not listed for sale on the regular housing market, in part, because they are have been foreclosed on. HUD foreclosed homes are those whose original buyers have defaulted on their loans and payments. Their buyers had FHA loans that they were not able to keep up with and therefore lost ownership of their homes.
As a result, the FHA comes in and takes possession of the HUD foreclosed homes. It pays the mortgage lender what is remaining on the balance on the home and then seizes control of the property.
However, the FHU does not want to keep owning the home and wants to recoup the money that it has put out for taking ownership of it. To make it attractive to buyers and sell it as quickly as possible, it will have the home appraised and then price the home as low as possible, often at or slightly less than market value.
It should be noted, however, that HUD foreclosed homes are sold as-is, with no repairs or upgrades being done to them before they are put up for sale. Technically, anyone who has the funds or financing can buy HUD homes for sale. However, priority is given to people who will use the homes as primary residences.
Further, owner-occupant buyers of HUD homes must agree to live in the home for one year before they turn around and sell it. They cannot use it as a rental property with which to make money.
That is not to say that investors cannot buy HUD foreclosed homes, however. While the definition of what is a HUD home focuses primarily on favoring first-time and low or moderate income owner-occupants, HUD will agree to sell to an investor if no one meets the minimum bid requirements or has an interest in living in the home as a primary residence.
Why Buy a HUD Home for Sale?
A number of good reasons exist for why you should consider a HUD home, particularly if you are a lower income earner or have yet to buy your first home. These reasons can enhance the overall home buying experience and give you a financial advantage that is not available if you were to relegate yourself to the traditional housing market.
To start, HUD houses are often priced thousands of dollars less than their traditional housing market counterparts. FHA wants to unload these HUD foreclosed homes as quickly as possible. To do so, it will often price the HUD homes for sale in its possession at or slightly below their appraisal price.
This lower price means that you can get a high-quality home at much lower than you could if you were to buy from the regular housing market. You avoid taking on a larger home mortgage that can be more difficult for you to pay off and fit in your home buying budget.
Further, owner-occupants are given a higher priority than investors in buying these houses. When one of these HUD homes comes up for auction, people who intend to use them as primary residences have a 30-day window during which they can bid on the HUD homes for sale. People who want to buy a house to live in with their families have a chance to bid on and buy it before an investor who would use it as a rental property can.
Additionally, HUD offers assistance with closing costs to eligible buyers. It may extend as much as five percent of the home’s total value to the buyer as a way to assist him or her with paying the closing costs and buying the house.
Finally, HUD often only requires small down payments on their HUD homes for sale. It often makes available HUD homes with down payment incentives, such as its $100 Down program, that allow eligible people to purchase HUD foreclosed homes without having to put down thousands of dollars first.
These advantages can understandably appeal to home buyers, especially those who might otherwise be priced out of the local housing market. To find out how to use them to your benefit as a home buyer, reach out to West USA Realty and Carl Chapman REALTOR to get more information.
How to Find HUD Homes
HUD foreclosed homes are not listed for sale in an MLS like other homes for sale. In fact, HUD homes for sale are only made available through auctions that HUD holds to sell them.
When you want to find out what HUD homes for sale are available in a particular city, county or state, you can visit HUD’s website HUDHomeStore.com. This website offers the most updated listings of HUD foreclosed homes that are or will soon be going up for auction.
You can also find HUD homes that are available to bid on and buy when you contact a real estate agency like West USA Realty. In fact, HUD requires you to use the services of a HUD-approved agent like Carl Chapman REALTOR to bid on HUD houses that go up for auction. You cannot represent yourself in the sale; you must utilize the services of a Realtor to act as your representative and mediary in the auction and sale.
The HUD homes for sale will be available to bid on for 30 days. During that 30-day time frame, only owner-occupants can bid on the homes that are up for auction.
At the end of that 30 day window, HUD will consider all of the bids that have been made on the property. It will select the highest bidder and inform that buyer’s Realtor. The Realtor will also be given a settlement date. The bidder then has 30 to 60 days to close on the property.
If the bidder does not close on the home or no bidder meets the requirements for HUD to recoup all of its money in the sale, the property is put back up for auction. This second auction is open to investors, meaning that owner-occupant bidders will have to bid against people who want to buy the house as a rental or investment property.
HUD Financing Programs
To facilitate home buying among lower earners and first-time buyers, HUD makes available a number of financial programs. These programs are designed to offer financial assistance through grants, vouchers and loans to people who may otherwise have a difficult time making down payments or paying closing costs. They also focus on revitalizing poverty stricken areas and provide incentives for people to buy homes in and move to urban neighborhoods.
For example, HUD makes available its income-based housing voucher program, also known as Section 8. Section 8 is geared toward low income families and helps them buy affordable houses. It provides subsidies to eligible participants that assists them in making their monthly mortgage payments.
Likewise, HUD offers its One Dollar program that, as its name implies, lets low to moderate income earners buy HUD homes for one dollar. The HUD homes for sale through this program have been on the market for at least six months. HUD often makes available its One Dollar program in conjunction with other local non-profit homeownership organizations in a bid to revitalize certain neighborhoods and offer incentives for homeowners and businesses to come to an area.
The Good Neighbor program through HUD also focuses on neighborhood revitalization. However, this program is geared toward helping public servants, such as teachers, firefighters, police officers and EMTs, buy HUD foreclosed homes. It reduces the asking price for HUD homes for sale by as much as 50 percent.
Similarly, HUD utilizes its Non-profit Program to allow religious and non-profit community organizations to buy HUD homes. This program permits approved organizations to buy HUD homes for sale for as much as 30 percent off. They can then fix up and sell the homes to first-time or financially strapped home buyers.
Finally, HUD has a program that is known as its $100 Dollar Down program. As the name implies, this program lets eligible home buyers put $100 down on a HUD property for sale. It forgoes the normal 3.5 percent down payment that HUD normally requires from people who are approved to buy houses from it.
The availability of these programs and your approval for them depend on factors like your income and the area in which the home that you want to buy is located. You can learn if you qualify for them by hiring a HUD-approved agent to advise and guide you.
Buying a home through HUD can provide you with a number of incentives and rewards. You can get a home for you and your family for much less than what you could get from the traditional home buying market and MLS in your area. You also can get financial assistance in putting money down and closing on one of the HUD homes up for auction.
To find out if buying one of the available HUD foreclosed homes is the right choice for you, reach out to West USA Realty today. HUD-approved Carl Chapman REALTOR can explain more at length the available HUD home buying program and help you find the right HUD homes on which to bid.