HUDi brings your up-front costs down. The costs of buying a home are more than just the price you agree to pay for it. Before you move in, you'll have to pay various charges, which we explain below. The good news is, with HUD Homes these costs may be lower than they are with other homes.
Down paymenti.
Most people know that a down payment is a percentage of the price of the home that must be paid up front, in cash. Many people don't know that HUD can reduce that down payment from the 10% to 20% to a much more agreeable figure of 3%, or even less! On a $50,000 home, that's $1,500 versus $5,000 or $10,000.
This term covers various fees your lender charges for providing your loan, and other expenses. Closing costs typically add up to about 3% or 4% of the price of your home, depending on where you purchase it. But when you buy a HUD Home, these costs are often picked up by HUD--if they are specifically requested, by dollars amount, in the sealed bid offering. If you buy a HUD Home, HUD may pay many of your usual and customary closing expenses plus real estatei sales commissions up to 6%. Just remember that closing costs and sales commissions are deducted from the bid amount in making the decision as to which offeri a more competitive bid, pay your own closing costs. This makes HUD's net return greater, making your bid more favorable an increasing the likelihood that HUD will accept your offer.
Commissions.
These are paid to the brokeri by the seller, and usually amount to 6% or 7% of the cost of the house. When you buy a HUD Home, the selling agent's commissions are usually paid by HUD. HUD will pay a total sales commissioni of up to 6%.
Checking it out before you check in.
Before you buy anything, you'll want to know exactly
what it is you're getting. With something as important as your home, you can't know too much. That's why it's a good idea to get a professional inspection of your home - even before you make the offer. HUD strongly urges every home buyer to get a professional inspection, whether you're buying a HUD Home or not. HUD Homes are sold in "as-is" condition. That means you agree, if you buy the home, to accept it in its present condition. HUD does not pay for the correction of defects in existing homes that it sells or on homes purchased with FHAi-insured mortgages. The owner of the home will be responsible for needed repairs. Therefore, be sure of the condition of the home before you submit your offer.
The finish line.
The day you finally close on your new home will probably be one of the most exciting in your life. Finally, the long, tedious process of finding a home and getting a loan is over, and by the time the day is done, you'll be the proud and happy owner of your new home.
Before that day ends, you will be asked to sign a seemingly endless number of forms, but the closing agent will go over each one with you. It's all necessary, but you can make it a little easier by asking the real estate agenti about it before the big day comes. Also, when you apply for your loan, your lender is required to give you a booklet explaining closing costs, an estimate of how much cash you'll have to supply at the closing, and a list of all the documents you'll need.
If you have any questions, perhaps they are answered
in the "Q and A" section that follows. If not, why not go straight to the phone right now, and call a real estate agent and ask about HUD Homes? It's a small, first step. But the journey could eventually end at the door to a home you call your own.
