How To Buy A HUD Home

Frequently Asked Questions and Answers

What is a HUD Home?

When a homeowner has an FHA loan and fails to make their mortgage payments, the lender forecloses on the loan.  FHA insures the loan, pays off the lender, and takes possession of the property.  After this legal process, the home becomes a HUD home, and is made available for purchase.

Are These Homes Free and Clear of Liens?

Yes, once the property goes through the legal proceeding, and HUD acquires the property, it is free and clear of liens.  You can purchase title insurance at closing for your protection.

What are the Requirements for Purchasing a HUD Home?

• HUD requires all buyers to be pre approved for financing prior to submitting their bid.  You will be required to provide a pre approval letter from your lender.  If you are a cash buyer, HUD requires a proof of funds letter from your bank, prior to submitting your bid.
• HUD requires all buyers to submit a cashier's check or money order to be held as earnest money, with all bids.  If the bid amount is under $50,000.00 HUD requires $500.00 earnest money.  If the bid is over $50,000.00 HUD requires $1,000.00.  If your bid is accepted, your earnest money will be credited to you at closing.  If your bid is not accepted, your earnest money deposit will be returned to you.

How Do I Find Out About HUD Homes?

Visit our web site, and click on HUD Homes.  New listings are published every Friday.  If you are going to buy the home to live in, HUD offers a 10 day priority period to owner occupants.  This means only potential home owners can bid during the first 10 days.  Investor bids will not be considered during this time period.  If no bid is accepted, investors may bid on day 11.

What Do You Mean By Bidding?

• All offers are submitted on the internet through a sealed bid proceedure.  Once you decide what you want to offer on the home, I will meet with you and submit your bid.  This information is transmitted electronically.  HUD has the right to accept the bid which nets them the greatest return.  If the bid does not meet their threshold, they do have a right to decline the bid.  HUD has the right to reject any bid.   Once a bid is accepted, the winning bid is posted on the internet.
• If you are an owner occupant bidder, and the listing is new (just came out on Friday), your bid must be submitted by midnight on the 10th day (2nd Sunday after innitial listing).  The winning bid will be posted on the 11th day (Monday).
• If you are an investor, and an owner occupant bid is not accepted, your bid will be considered after midnight on day 11 (Monday).  This means, you must get your bid submitted prior to midnight on Monday.  The results will be posted on Tuesday.  If no bid is accepted, the bidding continues on a daily basis.

How Do I Get Prequalified To Purchase a HUD Home?

You may talk to a lender of your choice.  Just explain to them you want to be prequalified to purchase a HUD Home.  If you would like for me to assist you with this process, simply fill in the information below and submit to me.  Or feel free to contact us by telephone at 317-770-1331.