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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.

How do I buy a HUD Home?

Properties are marketed on a competitive basis with offers being submitted

through any participating licensed real estate broker.

David Brunet with Global Choice Properties will assist you in

the transaction. He can show the property  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.  The most popular program 

today is the $100 down payment incentive.  The only investment on your

part is $100 and most HUD homes are eligible for this incentive. 

Any HUD home purchased using the $100 down payment incentive must be for the full listing price.  If you have more money to put down towards the purchase, you may be able to offer less than the listing price.

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

The listing price of a HUD property is a price based on the appraised value. 

If the home does not sell in a specific period of time or if the market is slow,

HUD may reduce the price to make it more attractive for potential buyers.

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.

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

No. HUD Homes are listed for sale in the local multiple listing service (MLS), our website www.hudhunters.com or www.hud.gov .

TERMS YOU NEED TO KNOW.

Adjustable Rate Mortgage (ARM).A type of mortgage rate loan whose interest rate changes periodically up or down, usually

once or twice a year.

Annual PercentageRate (APR). Everything financed in your mortgage loan package (interest, loan fees, points or other

charges) expressed as a percentage of the loan amount (usually slightly above the actual interest rate alone).

Assumable Loan. A loan in which the lender is willing to “transfer” from the previous owner of the home to the new owner,

sometimes at the same interest rate, sometimes at a new rate. An assumable loan can make your home more attractive to buyers

when you want to sell.

ClosingCosts.Costs the buyer must pay at the time of closing in addition to the down payment: including points, mortgage

insurance premium, homeowners insurance, prepayments for property taxes, etc. Closing costs average 3 percent -4 percent of

the loan amount. If you’re buying a HUD Home, you can request they be paid by HUD, if the sales incentive is offered.

Contingency.A condition put on an offer to buy a home; such as the prospective buyer making an offer contingent on his or

her sale of a present home.

ConventionalMortgage.A type of mortgage not insured by either the Federal Housing Administration (FHA) or the

Department of Veterans Affairs (VA), and thus usually requiring a 10 percent - 20 percent down payment. (HUD Homes may

be purchased with a conventional mortgage.)

EarnestMoney. Funds submitted with an offer to show “good faith” to follow through with the purchase. Earnest money is

placed by the broker in an escrow/trust account until closing, when it becomes part of the down payment or closing costs.

(HUD generally requires an earnest money deposit of $500-$2,000.)

Escrow.A procedure in which documents or transfers of cash and property are put in the care of a third party, other than the

buyer or seller.

FHA Financing. Financing for a loan which will be insured against loss by the Federal Housing Administration—a part of the

U.S. Department of Housing and Urban Development (HUD). Such financing allows for a lower down payment than required

by most lenders.

Homeowners Insurance. Insurance that protects the homeowner from “casualty” (losses or damage to the home or personal

property) and from “liability” (damages to other people or property). Required by the lender and usually included in the monthly

mortgage payment.

Loan Origination Fee. A fee charged by the lender for evaluating, preparing, and submitting a proposed mortgage loan.

Mortgage Insurance Premium (MIP). A charge paid by the borrower (usually as part of the closing costs) to obtain financing,

especially when making a down payment of less than 20 percent of the purchase price, for example on an FHA-insured loan.

Point. An amount equal to one percent of the principal amount being borrowed. The lender may charge the borrower several

“points” in order to provide the loan.

PropertyTaxes.Taxes (based on the assessed value of the home) paid by the homeowner for community services such as

schools, public works, and other costs of local government. Paid as a part of the monthly mortgage payment.

Title Insurance. Protects lenders and homeowners against loss of their interest in property due to legal defects in the title.

VA Loan. A loan guaranteed by the Department of Veterans Affairs against loss to the lender, and made through a private

lender. (HUD Homes may be purchased with a VA loan.)