Foreclosures - Frequently Asked Questions
HUD Homes
Q: What is a HUD home?
A: When a homeowner with a mortgage insured by HUD cannot meet their payments, the lender forecloses on the home. HUD then pays the lender what is owed and takes ownership of the property. Then, HUD attempts to sell the home as soon as possible.
Q: Can anyone buy a HUD home?
A: Yes, anyone can buy a HUD home. Contrary to popular belief, these homes are not only for low income buyers. However, most are in the affordable price ranges for low and mid income purchasers. If you have the cash available or are able to qualify for a mortgage, you can buy a HUD home.
Q: How can I buy a HUD property?
A: The best way is to call a real estate broker or agent in the area where you want to buy a HUD home. In most cases, HUD homes are sold in an offering period. At the end of that period, all offers are opened and the highest bid is accepted. If the home is not sold in the initial offer period, you can submit a bid on any business day after that.
Q: If my bid for the home is accepted, what happens?
A: Your real estate agent should help you through the paperwork process. You will be given a settlement date, normally this is within 30-60 days, where the transaction will be finalized.
Q: Does HUD make repairs to homes prior to their sale?
A: Generally, no. HUD homes are sold "as-is," without any warranty. That means HUD will not usually make any repairs except in cases to eliminate a major safety problem or health hazard. Some of these homes may not be in good condition. However, all known defects in the condition of the house are reflected in the purchase price. A note of caution, however: the home should be professionally inspected before you purchase it.
Q: I've heard about a special HUD program for teachers?
A: Yes, That's right, HUD does have a program for educators. It's called "Teacher Next Door" , and it allows qualified educators to purchase a HUD home for half the listing price. There are FHA mortgages available for the TND program that require a downpayment of only $100.00. You should contact your real estate agent for more information.
Q: Will HUD pay any costs toward my purchase?
A: It depends. In many states, HUD will pay up to a certain percentage (around 2%) of your closing costs.
Q: Are HUD homes only intended for buyers with low incomes?
A: HUD homes range in their prices, but many are affordable for low- and mid-income buyers.
Q: Can HUD homes be purchased as investment properties?
A: Most HUD homes are offered on a priority basis to owner-occupant purchasers. That is, for people who are buying the home to live in as their primary residence. Following that priority period, properties that are still unsold are available to all buyers, including those buying for investment purposes.
Q: Where can I get a loan to buy a HUD home?
A: HUD does not make loans directly. But there are a number of mortgage lenders that can help you buy a home. Visit the mortgage information page to learn
VA Homes
Q: What is a VA home?
A: Very similar to HUD homes, a VA home is a property that is financed using a VA guaranteed loan and is foreclosed on due to non payment of the loan, and is then reposessed by the VA and sold at market value.
Q: Do I have to be a veteran to purchase a VA-owned property?
A: No. All VA properties are available to both veterans and non-veterans alike.
Q: How can I buy a property owned by the VA?
A: The best way is to contact a real estate broker or agent in the area where you wish to purchase the property. Brokers have the responsibility of showing the VA properties to prospective buyers and preparing purchase offers for these properties.
Q: Will the VA finance a purchase of the property?
A: Yes, financing is available for most, but not all, property sales. With VA financing, the down payment requirements are usually very reasonable, and the interest rate is established by VA based on current market conditions. The only drawback is that any purchaser who requests VA financing to purchase a VA-owned property must have acceptable credit and income to meet the loan payments, maintain the property, and pay all taxes, insurance, utilities and other obligations. The purchaser also must have enough funds remaining for family support. Often, due to these VA stipulations, it is better to use outside financing.
