When a homeowner defaults on a Federal Housing Administration (FHA) loan, the house is put on foreclosure and the Department of Housing and Urban Development (HUD) takes over. HUD puts foreclosed single-family and multi-family homes for sale to make up for losses.
Buying HUD homes can be advantageous because of the bargain prices and lack of competition. Buyers can also qualify for an FHA mortgage and avail of special buyer’s programs.
However, don’t underestimate the risk that comes with buying HUD homes. They are typically sold ‘as-is’ and on a rushed timeline, which means you can lose a fortune on repair costs.
Keep reading to learn about the pros and cons of buying an HUD home in Charlotte, NC.
Pros of buying a Charlotte, NC HUD home
- They’re a bargain
Unlike typical homes for sale, HUD homes aren’t in the market for a profit. Foreclosed homes are appraised to arrive at a fair market value.
On top of that, these homes are made even more affordable as homebuyers can negotiate for HUD to pay a portion of the closing costs.
- Less competition
Homebuyers are prioritized over investors when bidding takes place on HUD homes. Investors can only bid on the property if it has been listed for 30 days or more.
This means that homebuyers have a better chance making bid in the first few weeks that HUD homes are on the market.
- Qualify for an FHA mortgage
Not every buyer and home qualifies for an FHA mortgage. Since all HUD homes have been previously bought with an FHA mortgage, you know that the property will qualify for an FHA loan.
Buyers with a credit score of 580 or more are eligible to pay only 3.5% of the final sales price as a down payment. Meanwhile, buyers with credit scores lower than 580 willl need to pay 10% down payment.
- Make use of special buyer’s programs
Select buyers can take advantage of special programs such as the Good Neighbor Next Door.
The Good Neighbor Next Door program is offered to qualified program participants like police officers, healthcare professionals, teachers, and firefighters. Select HUD homes are offered to these buyers at 50% off of the list price.
Cons of buying a Charlotte, NC HUD home
- Sold ‘as-is’
Most foreclosed properties require significant repairs to transform them into a livable home.
Especially if the home has been on the market for some time, you’ll have to pay a hefty price for plumbing, electrical, and pest maintenance or repairs.
- Rushed timeline
HUD transitions are expected to close almost twice as fast as conventional home sales. This means that buyers only have a few weeks to secure a mortgage for down payment and repair costs.
Is buying a HUD home a good idea?
Buying an HUD home in Charlotte, NC can be a very good bargain. Make sure to hire a licensed qualified HUD real estate agent like me, Nancy Braun, for a smooth HUD home buying process.
Call Nancy Braun of Showcase Realty at 704) 997-3794 for further assistance.
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