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Foreclosures - Frequently Asked Questions
HUD Homes
Q: What is a HUD home?
A: When a homeowner
with a mortgage insured by HUD
cannot meet their payments, the lender forecloses on the home. HUD then
pays the lender what is owed and takes ownership of the property. Then,
HUD attempts to sell the home as soon as possible.
Q: Can anyone buy a HUD
home?
A: Yes, anyone can buy a HUD home. Contrary to popular belief,
these homes are not only for
low income buyers. However, most are in the affordable price ranges for
low and mid income purchasers. If you have the cash available or are
able to qualify for a mortgage, you can buy a HUD home.
Q: How can I buy a
HUD property?
A: The best
way is to call a real estate broker or agent in the area where you want
to buy a HUD home. In most cases, HUD homes are sold in an offering
period. At the end of that period, all offers are opened and the
highest bid is accepted. If the home is not sold in the initial offer
period, you can submit a bid on any business day after that.
Q: If my bid for the home
is
accepted, what happens?
A: Your real
estate agent should help you through the paperwork process. You will be
given a
settlement date, normally this is within 30-60 days, where the
transaction will
be finalized.
Q: Does HUD make
repairs to homes prior to their sale?
A: Generally, no. HUD homes
are sold "as-is," without any warranty. That means HUD will not usually
make any repairs except in cases to eliminate a major safety problem or
health hazard. Some of these homes may not be in good condition.
However, all
known defects in the condition of the house are reflected in the
purchase price. A note of caution, however: the home should be
professionally inspected before you purchase it.
Q: I've heard about a
special HUD program for teachers?
A: Yes,
That's right, HUD does have a program for educators. It's
called "Teacher Next Door" , and it allows qualified educators to
purchase a HUD home for half the listing price. There are FHA
mortgages available for the TND program that require a downpayment of
only $100.00. You should contact your real estate agent for more
information.
Q: Will HUD pay any
costs toward my purchase?
A: It depends. In many states, HUD will pay up to a certain
percentage (around 2%) of your closing costs.
Q: Are HUD homes
only intended for buyers with low incomes?
A: HUD homes
range in their prices, but many are affordable for low- and mid-income
buyers.
Q: Can HUD homes be
purchased as investment properties?
Most HUD homes are offered on a priority basis to owner-occupant
purchasers. That is, for people who are buying the home to live in as
their primary
residence. Following that priority period, properties that are still
unsold are available to all buyers, including those buying for
investment purposes.
Q: Where can I get a
loan to buy a HUD home?
A: HUD does not make loans directly. But there are a number of
mortgage lenders that can help you buy a home. Visit the mortgage information page to learn about Ameriquest Mortgage .
VA Homes
Q: What is a VA home?
A: Very similar to
HUD homes, a VA home is a property that is financed using a VA
guaranteed loan and is
foreclosed on due to non payment of the loan, and is then reposessed by
the VA
and sold at market value.
Q: Do I have to be a
veteran to purchase a VA-owned property?
A: No. All
VA properties are available to both veterans and non-veterans
alike.
Q: How can I buy a
property owned by the VA?
A: The best
way is to contact a real estate broker or agent in the area where you
wish to purchase the property. Brokers have the responsibility of
showing
the VA properties to prospective buyers and preparing purchase offers
for
these properties.
Q: Will the VA
finance a purchase of the property?
Yes, financing is available for most, but not all, property sales. With
VA financing, the down payment requirements are usually very
reasonable, and the interest rate is established by VA based on current
market conditions. The only drawback is that any purchaser who requests
VA
financing to purchase a VA-owned property must have acceptable credit
and income to meet the loan payments, maintain the property, and pay
all taxes, insurance, utilities and other obligations. The purchaser
also must have enough funds remaining for family support. Often, due to
these VA stipulations, it is better to use outside financing.
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