Q. Do I have to
have cash to buy a HUD home or can I finance it?
A. No, you don't. you can finance through the mortgage
company of your choice using either FHA, VA, or Conventional lending. HUD
does not take land contracts.
Q. How much money do
I have to put down on a HUD or Repossessed home?
A. That would depend on the requirements of
the seller, the listing office, or the lending institution you use. You
need to find that out before bidding on a HUD home.
Q. Can I bid on the
homes myself?
A. No. HUD requires that all bids must be
submitted thru an authorized HUD broker. We are an authorized, licensed
HUD electronic bidding office.
Q. What is a
short sale?
A. A short sale is when your mortgage
lender will take less money than you owe for your mortgage.
Q.
What is a "deed in lieu of foreclosure?"
A. This is when you offer to give up
all rights to the property to your lender rather than go thru the
foreclosure process.
Q. What about
repairs required by the city?
A. You should obtain the
inspection report and review it prior to your offer. Normally the City
will require you to repair (at your own expense) all defects listed on
their City Property Inspection Report before you occupy the premises and
require you to have the repairs inspected and approved prior to issuing
you a Certificate of Occupancy. Q.
What is a HUD Home?
A HUD Home may be a single-family house, a town home, 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.
Q.
Who can buy a HUD Home?
A. 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.
Q.
Can I get a HUD Home for free, or for one
dollar?
A. No. HUD acquires its properties through the foreclosure of FHA
insured mortgages. One of HUD's many missions is to maximize return
to the FHA insurance fund, which it does by selling the properties
at fair market value.
Q.
How do I buy a HUD Home?
A. Our policy is to market
acquired properties on a competitive basis with offers being
submitted through any participating licensed real estate broker.
Local brokers will assist you in the transaction. They can show the
property to prospective buyers, as well as answer questions and
provide information on the location of parks, schools, shopping, and
employment centers.
Q.
Are HUD Homes meant for low income people?
A. 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 (see page 3).
Q.
How does HUD decide how much to charge for a
HUD Home?
A. The listing price of a HUD property is a price based on the
appraised value.
Q.
Can investors purchase HUD Homes?
A. Yes. However, HUD offers its properties to owner/occupants for a
period before making them available to investors.
Q.
What happens if I can't close the sale within
the time permitted by HUD?
A. You'll probably have to pay fees for an extension of time, usually
in increments of 15 days.
Q.
Is there any way for me to get advanced notice
about homes that will be coming up for sale?
A. No. HUD Homes are listed for sale in the local multiple listing
service (MLS), the Internet at
www.hud.gov or ask your broker.
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A WORD ABOUT LEAD-BASED
PAINT.
HUD and the Environmental Protection
Agency (EPA) have begun a nationwide effort to alert home buyers
to the risk that older homes may contain lead-based paint. Lead
exposure can be harmful to young children. If you are making an
offer on a home constructed prior to 1978, you should receive a
copy of the EPA pamphlet “Protect Your Family from Lead in Your
Home” from your broker. You will be required to submit a
lead-based paint addendum with your offer on the HUD Home. You
will be given the opportunity to conduct a risk assessment or
lead-based paint inspection (at your own expense) prior to being
obligated under the contract. |
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 Percentage Rate (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.
Closing Costs. 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.
Conventional Mortgage.
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.)
Earnest Money. 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.
Property Taxes. 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.)
Treasure Coast Foreclosed Homes
772-332-7373
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