HUD FHA Loans-Affordable Housing for All

| January 2, 2012

HUD homes are quite similar to the usual homes, but they are purchased using the HUD FHA Loans. Here, HUD denotes Housing and Urban Development that came into existence in the year 1965. Basically, Housing and Urban Development department is not a lender. It oversees the functioning of various Federal Housing Agencies such as FHA (Federal Housing Authority). Federal Housing Authority insures that all the home loans in the specified areas of the US never go into default.

When a house qualifies for a HUD FHA loan, it actually means that the government is providing a guarantee that in case of any default on the loan amount by the lender, the FHA will cover the entire amount of the loan. The HUD homes are actually those homes where the owner has defaulted on the loan and the government paid the loan amount and now owns the property.

However, neither the lender nor the government is interested in such properties, so they immediately revert to the market. Since FHA is also responsible for promoting the affordable housing for all, such houses are placed for sale on the market with a hope that all those who are qualified for a new HUD FHA loans will come forward to buy these houses by arranging a new loan.

Locating HUD homes is not that cumbersome. Hundreds of foreclosed homes are sold by HUD (HUD home foreclosures) throughout the United States by utilizing the services of approved brokers. Such properties are duly advertised in the local papers with a declaration that these brokers are approved to sell these properties. People interested in such properties can also find them using the listing services, where for a fee these guys can hook them to several homes in their local area. These kind of houses can also be searched on the internet or by using the services of the local realtors as many of them are interested in getting rid of such properties at the earliest. All those who are qualified for the HUD FHA loans can really get good deals on some of the properties.

If you are interested in purchasing a HUD home, you should never assume that they are great houses where you can move in right away. Instead, you should get them properly inspected as some of these houses may need significant fixing. It will not be possible for you to negotiate the repairs in your contract, so you should check this beforehand.

The process to purchase these HUD homes involves a close bidding process where the prospective buyers submit their offers on the release date fixed by the HUD. Once the highest offer is accepted by the HUD, the rest of the bidders move out from the race.

Category: Home Loan

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