FORECLOSURES-FHA OFFERS A GREAT OPPORTUNITY FOR REAL ESTATE BUYERS
It had been a while since I had really been to an FHA (Federal Housing Administration oversees the housing program for the HUD-Department of Housing and Urban Development) training session and since we all need to revisit areas of expertise, recently, I took a class on HUD foreclosures, aka "repos."
Two of my company's associates joined me for the training session-so did 147 other real estate agents in the North Dallas area. This is BIG BUSINESS and the main purpose of this training was for the real estate community to show and sell more foreclosures.
HUD's foreclosure rate is up considerably, therefore there are quite a few houses on the market that the government is selling. Anyone can buy a HUD foreclosure-those who want to live in the property, commonly known as OWNER OCCUPIED, as well as those that want to purchase for purposes of investment-known as INVESTORS.
A good number of those that qualify for FHA mortgage loan financing require some repair. The amount of the repair is estimated prior to the property being put on the market and that amount of money (up to $5,000) plus a 10% overage is required to be put aside by the borrower at the time of closing in order to complete said repairs. If the repair cost estimate is more than $5,000, the property is not eligible for FHA mortgage loan financing, but can be purchased with other types of financing.
Investors typically use "hard" money where the loan amount is based on the "after repaired" value. Hard money is expensive and short term.
Owner occupied buyers can use conventional financing that will allow for some repairs to either be escrowed or do a two step loan, which allows the buyer to repair the property after closing and include a portion of the repairs in the loan. These loans require extremely good credit and a low Loan to Value ratio, plus they are not as plentiful as before the sub-prime crisis.
HUD foreclosures typically sell very quickly-usually with 10-20 days, so if you find one, you need to be prepared to act quickly.
To buy a HUD foreclosure, you should first contact a Loan Officer from a reputable lender who can pre-qualify and pre-approve you for your upcoming loan. The Loan Officer can also tell you what you can do to qualify for a home loan. Their services are usually complimentary as they want your business. With your blueprint in mind, you can work toward your first home. If you don't know any lenders in the area, call me as I know some great people who will work hard to earn your business-Pat @ 469-231-8744.
An FHA loan requires proof of funds for closing and verification of income.
Your next step is to call a Realtor (preferably me!) to help you determine which area of town works for you and some of the basics you are seeking in a new home-number of bedrooms, bath, school district, etc. When you write an offer-it's actually a bid with a HUD house, so you are bidding against other buyers. Don't be discouraged if you do not win the first bid. HUD is looking for the best offer which offers the highest return on their money.
With your bid, you will be required to have certified funds for the earnest money-if the property is appraised at or below $50,000, the earnest money amount is $500 and above $50,000 is $1,000.
So now that you know just a little bit more about buying a HUD home, get prepared by calling me and getting pre-approved for your loan.
You can reach me at 469-231-8744 or at Pat@PatOwensRealty.com.
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