What is a HUD Home?
When a Federally Insured Mortgage goes into foreclosure, the lender can collect on the mortgage insurance and transfer ownership of the foreclosed property to the Department of Housing and Urban Development. The Department is commonly referred to as “HUD,” and the foreclosures now owned by the US Government are called “HUD Homes.” HUD Homes are sold on an “as-is” basis. If there are any defects in these properties, HUD will not make repairs.
Who is Allowed to Buy a HUD Home?
Most HUD homes are offered exclusively to Owner-Occupants, Nonprofits & Government Agencies during the first 30 days on the market. If an acceptable bid is not received during the first 30 days, daily bidding is extended for all bidders beginning on day 31.
How To Place a Bid on a HUD Home
Bids must be placed by a HUD Approved Broker. Four Steps are required before your bid can be submitted to HUD:
- Provide Proof of Funds and/or a Mortgage Pre-Approval Letter
- View the property with the help of a HUD Approved Broker
- Sign the HUD Sales Contract and related Disclosure Forms
- Bring Earnest Money in the form of a Cashier’s Check payable to HUD
WHAT IS EARNEST MONEY?
Earnest money is money put down to demonstrate your seriousness about buying a home. It must be substantial enough to demonstrate good faith and is usually 1-5% of the purchase price. [HUD will specify how much earnest money is required for each HUD home bid.] If your bid is accepted, the earnest money becomes part of your down payment or closing costs. If your bid is rejected, the earnest money will be returned to you. If you back out of a deal [after a contract has been executed], you may forfeit the entire amount. – HUD.gov “100 Questions”
- For more information or to schedule a showing, call Tim at 832-212-3304
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