Buying a HUD Home in St. Louis and St. Charles with a very low down payment
Buying a HUD Foreclosure Can Be a Great Home!
We have all heard the news that foreclosures are making up much of the available homes for sale in today's market. We all know that these foreclosures can be found in every neighborhood and priced well below market value.
Great Deals on HUD Foreclosures
The housing market fluctuates from one area to the next, but no matter where you find HUD foreclosures the chances are good that you will be able to but it for between 27% and 50% less than the local market prices. That translates into fantastic savings and great deals in a time when the economy is tight and dollars don't stretch as far as they once did.
HUD Foreclosures are not Bad Homes!
There had been a poor view of HUD foreclosure sales, but as many new home buyers are finding out; homes sold in foreclosures are not ALL bad homes, or in complete disrepair. You should always do your homework when buying a HUD foreclosure. Many HUD foreclosures are move in ready but if you are handy, and can handle some repairs, can afford to pay for them, or get an FHA 203k Renovation Home Loan, the deep discounts on government HUD foreclosures that need some work are a real steal.
To see all the available HUD homes in your area click HERE and be taken to the HUD Homestore website. Before you go to the website there her are some keys to know:
IN = Insured, these are homes that are move in ready
IE = Insured with Escrow the home is near move in ready but needs some repairs before it is FHA qualified. Consider the FHA 203k renovation loan.
UI = Uninsured, a lot of work will need to be done to this home to bring it up to minimal standards. These are the super low proced homes but with cause, you will need the FHA 203k renovation loan with these homes.
HUD Foreclosures: Frequently Asked Questions:
Do I need a Realtor? Yes, contact a real estate agent who is registered to bid with HUD.
What are my financing options? Cash, conventional home loans, or FHA financing, look into the FHA 203k Renovation mortgage.
Is there a minimum down payment? Yes, 3.5% the lowest available!
Does HUD give money for repairs to the property? No, however a home buyer may want to utilize an FHA 203k renovation home loan to finance the repairs on the property.
Can I make repairs to the property if needed prior to purchase? No, repairs should be only performed on a property AFTER the new owner has taken possession.
Do I need an appraisal? No, HUD conducts an appraisal before listing the home. An appraisal will be necessary for Conventional home loans and an FHA 203k mortgage.
Can I have the property re-appraised and lower the price of the home? No, a second appraisal may not be ordered simply to support a purchase price that is higher than the value on the current appraisal.
Do owner occupants have a priority in bidding? Yes, there is an initial owner-occupant period set aside at the very beginning of the bid process.
What is HUD? The U.S. Department of Housing and Urban Development.
4 Costly Mistakes When Buying a HUD Foreclosure
OVER BIDDING; Over Bidding is a constant mistake made by those people who have not done their homework. Remember when you bid over the asking price for a home the existing appraisal can not be used, and a new appraisal is needed. Beyond an additional cost, this new appraisal can create problems all of its own. It is far better to bid the asking price or slightly less if you are not in a red hot market where properties are going under contract quickly.
Also, when you overbid for the home you will be required to pay the difference between your overbid and the appraised value of the home, using the established HUD appraisal. Plus, your down payment.
Paying For an Appraisal; Paying for an appraisal is not necessary when buying a foreclosure from the entity which holds the foreclosure. For example, if you were to buy a HUD foreclosure, the appraisal that they have already paid for can be requested by the lender and used to finance the home. This is a $400 to $500 savings. By using the existing appraisal you can save time and not waste energy explaining to the new appraiser that the house is a foreclosure and that is why they can not reduce the value based on small cosmetic issues. In short ALWAYS use the FREE appraisal from either HUD or VA.
Not Maximizing Your Investment: Not understanding how to make money buying a foreclosure is a missed opportunity! When you meet with your Home Inspector, what you need to tell them is everything that you wish to have repaired. (It is best to make out a list before he arrives). When that list has been annotated by the Home Inspector, you can bring that list to your FHA 203k lender and show that these additional repairs must be included in the loan. This can increase the loan amount slightly but the home will be in the condition that YOU prefer. This leaves your money where it belongs….in your pocket.
Not Getting the Most Out of a Home Inspection: If you are buying a foreclosure you always want to make sure you get a home inspection. This will let you know what sort of repairs will be required and if you are getting in over your head. The value of a home inspection can be increased if you meet the inspector at the house. Remember this inspector is working for you, since you pay them you should get what you want. The inspector needs to understand that the property is a foreclosure, and that they can help you by listing out the things that you would like to have fixed once you buy the home.
Buy a HUD Foreclosure With only a Down Payment!
You have visited the HUD homestore website and seen many of the great homes that can be yours for just a 3.5% down payment. But, what about the associated closing costs involved in purchasing your next new home?
Every month I help many new home buyers get into a new home with little to no money money out of pocket. There are 3 different ways to make this happen:
Negotiate with the seller to pay for the closing costs, something that can be difficult with HUD foreclosures but not impossible.
Allow your lender to help you pay for your closing costs. Not all lenders can or will accomplish this, but I do it every month. Learn more HERE.
Are You Pre-Approved?
Please, do not go home shopping without being first pre-approved by a qualified mortgage professional. If you are going to include HUD floreclosures in your home search you should consider being pre-approved for an FHA 203k mortgage. I would welcome the opportunity to help you reach your goal of owning a new home. It costs you nothing to get pre-approved for a mortgage and I welcome all your questions before and after pre-approval.