So you’ve decided to buy a home. You’ve researched your options, read up on what a HUD home is, and are now curious – is a HUD home right for you? The decision to buy a HUD home can be very situational. Let’s look at some common pros and cons to help you decide.
Benefits of Buying a HUD Home:
There are many pros to buying a HUD home. If you qualify to buy a HUD home, you would be eligible for the following benefits:
- Assistance from HUD with closing costs (this can be up to 5% of the purchase amount)
- Faster closing if you’re using an FHA loan to buy the home, as these are already pre-approved.
- Low deposits, making entry into the home market an affordable option to many.
- HUD homes prefer buyers who will be living in the home over real estate investors more interested in flipping or renting the property.
Deciding if a HUD is the best option for you
HUD homes can save home buyers lots of money. If you have credit problems, have had difficulty saving up for down payments, or a lower-income job that may affect your approval chances of a traditional home loan, HUD may be right for you.
HUD homes entice lenders to provide mortgages to home buyers. This is because HUD insures mortgages to ensure that buyers do not default on their loan. This makes lending to potential homeowners interested in the HUD home attractive to both buyers and lenders.
Things to be aware of when considering whether or not to buy a HUD home:
HUD homes are sold in “as-is” condition, and the lower price reflects that. All homes have been evaluated and appraised before being placed for sale. Keep in mind that many HUD homes have had previous owners who may have defaulted on their mortgage. This means if there is property damage, it will be up to the new owner (possibly you) to repair it.
Keep this in mind when deciding to buy a HUD home. You want to look at your own experience level in fixing potential issues that may arise yourself, or calculate how much you may need to invest in needed repairs or upgrades for you to be comfortable and happy in your new home.
However, because there is a risk to buyers, HUD offers many incentives such as an FHA Rehabilitation Loan. This is a special type of mortgage that allows the buyer to fold estimated repair and upgrade costs into the loan cost. This makes securing the money for much-needed repairs an easier solution.
In summary, if you’ve decided a HUD home is right for you, and would like to find local HUD home listings in your area, check out our free listings of HUD homes near you today.