Buying HUD homes is a topic that has filled volumes. Incredibly, even though there are hundreds of classes, books, articles, and seminars that promise to tell you the secrets of investing in HUD homes, plenty of people still have lots of costly misconceptions about it. Luckily, there are experts that can set the record straight. If you are planning on buying HUD homes, make sure that these common myths are not holding you back:
Myth #1: Savings Are Automatic – You cannot assume that you will always get savings off the market value of a home. While most HUD properties are sold at below market price – in some cases, more than 60% off market price, with savings of 5% to 10% being standard – these savings are in no way ensured. There are plenty of reasons why you may end up buying HUD homes for full price or even for more than a property is worth: The property may be incorrectly assessed and priced. Demand for the property may push the price up. In some cases, a property is so heavily mortgaged that the government may have to pay out more than the property is worth to the lender, and so demand more than the market value themselves. In other cases, buyers may find after they buy a property that the asking price plus the cost of repairs ends up costing more than the value of a home.
Don’t let this myth burden your bank account. When buying HUD homes, always get a professional assessment, estimations of any repairs that need to be done, and do the math. Determine the total cost of the home (including repairs, closing costs, home loan costs, and the actual asking price) and compare that to the price being offered. If there are no savings or if the savings are paltry, keep looking.
Myth #2 HUD properties are the same as other distressed properties – When buying HUD homes, it is useful to realize that HUD homes refers specifically to properties that are being offered by the Department of Housing and Urban Development (HUD), a government agency. These homes have been bought using a mortgage insured by the government. When this loan is defaulted on, the HUD pays the lender the money defaulted on the loan. Then HUD takes over the home, secures it, and offers it for sale.
When buying foreclosure home, you may want to know that there are some advantages to buying HUD homes specifically. If you are a teacher, law enforcement officer, or fire fighter, for example, special HUD programs allow you to start buy homes for less. You can also take advantage of low down payments and no closing costs.
If you are ready to start investing in HUD homes, get a resource that can help. Join MostlyForeclosures.com today and you will get the latest distressed property listings as well as all the insider facts and tips you need to start buying HUD homes like a pro.
Print This Post
Email This Post
HUD Fair Housing Equal Opportunity
