HUD Homes Questions & Answers (410) 952-2641 phone/text for more info
What is a HUD home? A HUD home is owned by the US Department of Housing and Urban Development. HUD acquired the home because the previous owner had an FHA mortgage on the home that they were eventually unable to make payments on. Since FHA (Federal Housing Administration) guarantees the loan, the Lender submits a claim against the mortgage insurance policy. HUD then acquires ownership of the home and after an appraisal is performed; HUD offers the homes for sale as-is. Who Can Purchase a HUD Home? Anyone can purchase a HUD home, regardless of race, color, sex, religion, national origin, handicap or familial status. If the purchase will be financed, prospective buyers must obtain a pre-approval letter in a specific format that states information such as whether or not the Lender has reviewed the borrower’s income, assets, credit, etc. The specific format required is available online at the marketing and management company website. We can also email or fax the required lender format upon request. Cash buyers must provide proof of cash funds equal to or greater than the purchase price of the property. All buyers must use a HUD registered broker to purchase a Baltimore HUD home. Do I have to use an FHA loan to buy a HUD home? You can pay cash, apply for a conventional loan or an FHA loan when buying a HUD home. Here are 10 FHA Loan Eligibility Requirements*:
1. FHA loans are only for owner-occupants, not for investors. FHA financing applies only to one primary residence to ensure investors do not take unfair advantage of these loans. 2. The borrower must have a valid social security number. 3. The borrower must reside in the United States legally, although citizenship is not an FHA requirement. 4. The borrower must be of legal age to sign a mortgage. 5. The borrower must qualify for the loan from an FHA-approved Lender who will follow the proper standards to verify income, assets, liabilities, and credit history. 6. While there are no maximum income limits for qualifying, the borrower must have sufficient income to pay the monthly mortgage payments. 7. Past credit history will be reviewed to determine if the borrower has the ability to make timely loan payments. If you have no credit at all you may still qualify for a FHA loan. If you have some credit you will typically need a minimum middle credit score of 620 to qualify for a FHA loan. 8. For individuals with no credit, FHA will consider documented alternative credit sources: utility bills, child care payments, furniture rental stores loans, cell phone bills and cable TV bills that have been paid on time. 9. Individuals who have gone through bankruptcy may apply for an FHA loan after three years. 10. Each county sets maximum FHA loan limits, using formulas from the National Housing Act. No FHA mortgage can exceed the limit set by the county. Limits for each county can be found here: FHA Maximum Loan Limits
*subject to change
What is the Teacher Next Door Program?
The Teacher Next Door Program is a HUD special program also known as the Good Neighbor Next Door Program. Teachers, police officers, firefighters, and emergency medical technicians can purchase specific HUD homes at a 50% discount. The properties are located in revitalization areas and can be a single family home, townhouse or condominium. The purpose of the program is to strengthen communities by encouraging these individuals to live in the community.
How will I fix-up the house?
FHA 203k loans are the most popular financing used to purchase HUD homes. It is important to note that not all Lenders offering FHA loans have the 203k loan product. As of those that do offer 203k loans, not all will participate in the Good Neighbor Next Door Program. The minimum amount of repair money in an FHA 203k loan is $5,000 and you can borrow as much as you qualify for improvements. Everything from a new roof to lighting fixtures can be included in a 203k. There is also an option to add up to six months of mortgage payments to the loan to cover monthly payments during the renovation period. If the property needs less than $5,000 for minimum property standard repair items such as heating, plumbing, roofing, etc.; a FHA loan with a Repair Escrow can be used to make the necessary improvements. Please note FHA guidelines are subject to change. Where can I find a list of available HUD homes? We update the website often with a “HOT List” of Baltimore HUD homes. Our picks of not-to-be-missed properties each week is not a complete list, but we would be happy to share the complete list with you or perform a custom search based on your needs. Call us today at 410-952-2641!
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