What is a HUD Home?
Today, there are more and more types of properties advertised for sale in the Augusta real estate market. REOs, short sales, foreclosures, and HUD homes. There are distinct differences between these types of homes and it is important to know what these properties are and are not, so you can make an informed decision in your home purchase.
A HUD Home is a 1-4 unit residential property that is now owned by the US Department of Housing and Urban Development (HUD). HUD took ownership of the property as the result of a foreclosure FHA (Federal Housing Administration) insured loan. HUD offers these properties for sale to recover the loss that was taken through the foreclosure.
HUD has each of these properties appraised and inspected before placing them on the market for sale. The appraisal allows HUD to determine the value of the property and the resulting value is the price that HUD places on the property. The inspection allows HUD to determine if there are any defecincies that would affect the potential buyers ablility to obtain a loan. When a lender loans money on a property, they want to know that the property is free of major defects. If the inspector finds an issue of a major nature, HUD will allocate funds for the buyer to make the appropriate repairs after they take ownership.
There is often a "stigma" associated with HUD properties. HUD homes are often talked about as "in need of repair" or "low-priced housing". Neither of these is an accurate generalization of HUD homes. They are more often than not, great homes and are available in all price ranges. They are located in all areas of Augusta and offer great opportunites for purchase.
HUD is currently offering a special financing incentive for HUD homes. You have probably seen ads for "Buy a HUD home for $100 down!" Well, this is true...You must still qualify for a loan for the amount of the purchase, but instead of putting a minimum of 3.5% down, HUD offers this financing to be obtained with only $100 down. This is a tremendous opportunity.