Purchasing a new home is a hefty investment and is not a decision to be made lightly. That’s why more and more seniors are buying HUD homes. If you’re thinking about doing so, our three tips will help.
1. Know As Much as Possible about Buying a HUD Home Beforehand
The U.S. Department of Housing and Urban Development, or HUD, was established in 1965 for developing national policies and programs that address housing needs in the United States. One of the main goals of HUD is creating suitable living environments for Americans by developing and improving communities across the country and enforcing fair housing laws.
Seniors Buying HUD Homes must understand that HUD homes are 1-4 unit residential properties acquired by HUD after a foreclosure takes place on an FHA-insured mortgage. In the event of such a foreclosure, HUD becomes the property owner and offers the home for sale as a way to recover the loss on the foreclosure claim. Anyone, including seniors, who has enough money to purchase a HUD home or to qualify for a loan to purchase one may do so. HUD homes are typically offered first to people who intend to purchase the home as a primary residence.
2. Understand the Limitations of Purchasing a HUD Home
Seniors Buying HUD Homes should realize that purchasing a HUD home differs from purchasing a traditional home because HUD does not pay for correcting defects or making repairs found by a professional home inspector before you submit an offer to purchase the home. If you were to buy a non-HUD home, the seller may pay for part or all of these defects or repairs.
Incidentally, you should have a licensed professional home inspector carefully go through the HUD home before you agree to purchase it. These inspectors thoroughly inspect the home and make suggestions or recommendations on how to address issues before they become major issues. It’s also important to hire a home inspector to look at your potential new home because HUD does not offer warranties about the condition of its properties, nor does the department pay for corrections of defects or repairs.
3. Know the Process for Purchasing a HUD Home
If you are a senior who wants to purchase a HUD home, be aware that you must contact a licensed and approved HUD broker or another agent who is authorized to sell HUD homes because all offers must be submitted through him. HUD does allow real estate agents to acquire HUD properties. The department also pays a 6% sales commission to agents involved in the sale.
Another key to purchasing a HUD home is being aware of the fact that they are sold “as is” and that all HUD homes are sold on a cash basis. Seniors Buying HUD Homes should either have enough cash on hand to cover the sale or have made arrangements with a mortgage lender ahead of the sale. It’s worth noting that mortgage lenders are helping seniors buy homes on a daily basis. Regardless of age, seniors can apply for a mortgage and be qualified for one based on income, credit score, and available cash. It’s important for seniors to have the money ready to pay HUD because the department does not arrange for financing or offer any financing options themselves.
Seniors find that buying HUD homes is an affordable way to purchase a home for retirement or downsizing purposes. When buying a HUD home, seniors save money because the department pays up to 5% of the closing costs, and HUD brokers prepare and submit offers and deposits for you without charging you a dime. Just educate yourself about purchasing a HUD home ahead of time, understand there are certain limitations when you purchase a HUD home, and become familiar with the process for purchasing a HUD home in order to have a smooth transaction.
For more information on buying or selling a home along the 100 Mile Coast, contact the experienced agents at Cora Thomas Realty & Associates today.