What A Connecticut Buyer Needs To Know About HUD Homes
There are multiple ways of investing in real estate. An HUD home is one of the options. If you are thinking about buying an HUD property, read on to get more details about such an investment:
Definition: HUD homes are those homes which belong to the Department of Housing and Urban Development because they are foreclosed due to the home owner’s inability to repay the FHA mortgage. An FHA insured loan is a mortgage loan given by a Federal Housing Administration- approved lender which is insured by the FHA. The HUD department seizes the property and makes the payment of the mortgage to the lender and becomes the owner of the property. The original owners are evicted from the property.
Process: Generally, the HUD department offers the property at a discounted rate just to sell off the property as soon as possible. However, priority is given to those buyers who are looking to make the property their primary residence. Only if the HUD is unable to sell the property to such buyers, the home becomes available to all types of buyers and investors. Anyone who has the required financial backing to buy the property either with cash or through loans can invest in an HUD home. HUD does not offer direct loans to buyers.
Tips for buying HUD homes:
- There are many competitors for an HUD home because of the attractive price at which it is available. In case you are interested in an HUD property, you need to move fast to acquire the property before someone else’s offer gets accepted. You can get a pre-approval for a loan so that you can immediately purchase the property if the offer is accepted.
- Doing research is of utmost importance to know more about the history of the property. In many states where disclosure laws are not in place, the buyer is not notified about the dubious history of a property. In such cases, you suffer a big loss by investing in properties which are not fit for habitation. Home inspection is indispensable to ensure that the HUD property is worth investing in.
- To get more information about a particular HUD property, you can visit the MLS portals that list HUD homes or you can get in touch with the FHA Resource Center.
It is better to take precautions rather than regretting the investment decision after the deed is done.