HUD Homes, A Complete Misnomer

Home buyers might find buying foreclosed homes a great opportunity to buy Arizona homes at ultra-low price. Although foreclosures are truly an awful experience to homeowners, investors find the present state of the country’s property economy a great opportunity to buy low-priced properties as investments now that there are thousands or even millions of banks and HUD foreclosed homes for sale in the country and still rising.

Bank foreclosed homes, yes, but how about HUD homes? By definition, HUD or Housing and Urban Development is a United States Cabinet department in the Executive branch that functions under the federal regulations that oversees government foreclosures. It was founded as a Cabinet department in 1965 as part of the “Great Society” program of President Lyndon Johnson. The main purpose of the said department was to develop and execute policies on housing and metropolises.

According to RealtyTrac, calling a home an “HUD home” is a misnomer of sorts because HUD is an administrative agency. RealtyTrac, the leading online marketplace of foreclosure properties, reiterates that HUD is not a lender but a Cabinet-level agency that supervises a number of federal agencies and programs like the Federal Housing Administration or FHA that insure home loans for qualified areas in the country.

Since the Mortgage used to acquire these homes was insured by the FHA, there are a set of guidelines that should be met ahead. First, these homes must adhere to FHA’s guidelines in order to qualify for the FHA insurance program and where your lender is endorsed to tender FHA insured loans. But why do they call it a that way? What happens is that when a home is purchased using an FHA insured loan, then probably why it is called a ‘HUD home.’ When the foreclosure process is complete and FHA pays off the lender of record, the property does to the original owner – HUD. Since FHA is under HUD, HUD is responsible for all FHA insured loans.

In short, the moment homes enters a foreclosure process with FHA which is actually under HUD, the home becomes the property owner and has all the right to offer it for sale in order to restore the loss from the foreclosure.

Take note that not all foreclosed homes are HUD foreclosures. Foreclosed homes can be HUD foreclosures if the mortgage was insured by FHA and the owner defaults on their loan. These homes differ exactly from other homes for sale on the market particularly in the seller, and home buying process, including negotiations, price, and contract signing.

So, if you are interested in buying an HUD home, look into some web sites that list HUD homes. Visit Phoenix AZ Homes for Sale. Then make sure that you’ve got one qualified Realtor who will help you with finding affordable HUDHomes for Sale in Arizona.

10-day Owner-Occupant Priority Bidding Period–No investor competition on HUD Homes!

Phoenix HUD Homes For Sale

FHA REO properties are offered on an exclusive, priority basis to people who are buying the home as their primary residence via the 10-day Owner-Occupant Priority Bidding Period.  Other benefits available when placing an offer on a HUD home for owner-occupied buyers is there is no appraisal required in most cases and property condition reports are available prior to writing an offer.

As a buyer interested in purchasing a HUD foreclosure home you must be working with a Certified HUD Broker such as RE/MAX Diamond located in Mesa.  It is also imperative that you work with a real estate agent experienced in the HUD transaction process as it is quite different from a traditional or lender owned transaction.

Buy A Foreclosure Home in Phoenix For Less Than $800 Per Month!

Buy a Phoenix foreclosure home for less than $800 a monthPhoenix ranks as one of the “10 Great Places to Buy a Home For Less Than $800 a Month”, according to a recent article by Luke Mullins, On Friday September 10, 2010 in U.S. News & World Report.

Lower property values and dirt-cheap mortgage rates have combined to restore affordability to many real estate markets that were once wildly overpriced. “Right now, housing is about as affordable as it has been since at least the 1970s,” says Patrick Newport, a U.S. economist for IHS Global Insight.

Mullins writes… 

“Phoenix, Ariz.: After appreciating substantially during the real estate boom, the median home price in the Phoenix area has dropped nearly 44 percent since 2007. Despite the recent turmoil, the area’s sunny climate and abundance of outdoor activities continue to offer a wonderful quality of life for retirees or growing families. The median home price in the Phoenix area was nearly $145,000 in the second quarter of this year. After putting 20 percent–or $29,000–down, monthly payments for mortgage principal and interest on a median-priced home in the Phoenix area total about $575.”

Most first time home buyers are not putting 20% down but more often the required 3.5% down required for FHA loans which would equate to only $5075 down for the same median priced home example above. 

Also, there are many Neighborhood Stabilization Programs available in Phoenix as well as $0 down or low down home loan programs. For example Phoenix HUD governement foreclosures require only $100 down and rural communities such as Queen Creek, San Tan Valley, Apache Junction and Maricopa are eligible for the very popular Phoenix USDA $o Down Home Loan Program.  Veterans, active duty personnel, as well as some members of the National Guard and military reserves can qualify for zero-down-payment mortgages through the U.S. Department of Veterans Affairs.

Here is an example of a home in Queen Creek that qualifies for the USDA $0 down loan;

We're sorry, but there’s nothing to display here; MLS data service is not activated for this account.

Buying a HUD Home in Phoenix

Phoenix HUD Homes For Sale We have buyers who often ask us how to buy a house in the Phoenix housing market with no or very little money down. One of the most popular programs right now is the no money down USDA loan, but that is not going to work for most of the Phoenix market as it has to be a rural property.

One possibility to get into a Phoenix home with no money or very little money down is a HUD home. A HUD home is a a 1-4 unit residential home that was insured for an FHA loan program that has been foreclosed on.

Right now in Phoenix there are roughly 20-30 HUD homes a week coming onto the market, not only can you get into these homes for as little as $100 down, often times you will walk away from closing with money to repair the HUD home with.

What are some advantages in HUD homes?

  1. $100 down plus closing costs not paid by seller
  2. HUD will allow up to 3% seller concessions to help pay for closing costs
  3. There is no appraisal fee needed
  4. Electronic bidding
  5. Closing in 45 days or less

HUD homes are sold as-is, much like other foreclosure properties. A big difference is a HUD home has an estimated cost of repair for each property and the seller gives a rebate at closing for that mount.

For more information about buying a HUD home you can check out who handles the HUD properties in Arizona.