The Government plays an active role in supporting the real estate market. One of the main ways that it does this is to guarantee home loans made to qualifying first home buyers. The is facilitated through the Federal Housing Authority (FHA) who insures the loans against default. When home owners default on their loan repayments the FHA begins the foreclosure process and typically sells the property through a Housing and Urban Development (HUD) registered real estate agent.
Here you will learn the advantages and disadvantages of buying foreclosed HUD prosperities. One of the first things that you must understand is that HUD sells owner occupied properties. You will need to sign a document stating that you intend to live in the property for at least twelve months. You should only purchase a HUD property if you can truthfully agree to these terms. Breaking these conditions can lead to fines and other penalties.
This highlights one of the major disadvantages of investing in HUD properties. Because you must occupy the property it is not possible to scale your HUD foreclosing as you will at a maximum only be able to perform one such deal a year. You will also not be able to quickly flip the property so they are not suitable if you are looking for fast turnover.
You should also keep in mind that HUD properties tend to be at the mid to low end of the property scale. Depending on what your typical residence is they may not be suitable or desirable for you and your family. Also HUD properties tend to sell at close to market value due to the number of buyers who quality for FHA loans. And finally you will need to purchase the property through a HUD registered real estate agent so there are these costs to consider.
So why should you buy a HUD home? One of the main advantages is that you might qualify for a FHA loan yourself. This can provide you with an inexpensive form of financing. In order to encourage buyers the FHA will often offer special interest rates on the loan. You will need to inquire as to whether these are available on the property that you are looking at.
The two best ways to find HUD properties are to check out the HUD website online which lists the properties it has for sale or to find a real estate agent which specializes in HUD properties. A HUD registered real estate agent will be able to guide you through the process of purchasing a HUD property and is usually well informed about what properties are coming onto the market. On the Department of Housing and Urban Development website you will find listings for HUD properties. These typically detail the condition of the property; include a photo, and any other information that needs to be disclosed. By clicking on the property link you will be able to find out how to get more information about purchasing the property.
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