Rates are flat today. Today’s comparison mortgage rates with no lender fees are 4.125% on a 30 year, 3.375 % on a 15 year and 2.75% on a 5/1 ARM. (click here for details).

If you are looking for a new home I am sure you have come across a HUD home (aka FHA foreclosure). HUD homes can be a great deal, but the process to purchase one of these homes can be stressful if you don’t know what you’re doing. Today I’m sharing seven tips that will help you avoid HUD home headaches.

It’s all in today’s episode:


(Watch it on your mobile phone or email reader here)

If you are looking to by a HUD home, here are seven tips that will make the process easier:

1. Only owner occupied primary residence buyers are allowed in the first round of bidding. This is usually around the first 30 days. Sorry investors, you’ll need to wait for your turn. Also, keep in mind that if the price drops the 30 day cycle may start over.

2. If the HUD home is eligible for FHA financing, it has an existing FHA appraisal that must be used. The sales price is usually based on the existing appraised value. If you bid above that price, you’ll have to pay the difference out-of-pocket. However, if the FHA appraisal expired you don’t have to use it.

3. HUD does not automatically provide title insurance. Your lender should inform you of this ahead of time, but if they don’t you may want to consider a different lender. The only way the title insurance is covered by HUD is if they agree to pay for closing costs. This can be a big cost, and you should take it into consideration when buying a HUD home. Ask your Realtor or lender to find out how much it may cost.

4. If HUD is offering a repair escrow, that amount can be added to your FHA loan but HUD doesn’t pay for it. Sorry, but HUD won’t be writing a check for the new roof. It will come out of the escrow account set up with your new loan.

5. Your lender’s closing package must be sent to the title company up to ten days prior to the actual loan closing date in some states. Make sure your lender understands and can accommodate this requirement. This can be an issue when underwriting or the closing department is backed up.

6. HUD signs closing packages first. After the loan proceeds and the title company receives your down payment and closing costs, you’re allowed to sign. You also must wire funds ahead of time.

7. Closing delays are common due to “title clearing” issues. Foreclosed homes can have several liens due to utilities, taxes, and other situations that must be dealt with before closing can occur. Delays are common on HUD homes. They move at their own pace and require you to jump through the hoops. Remember, no matter how frustrating the transaction may be, you are still getting a great deal on a property. Sometimes this fact gets lost in the hustle and bustle of the HUD process.

There you have it! If you keep these things in mind, buying a HUD foreclosure will be a relatively painless experience. An experienced lender and Realtor can help ease some more of that HUD home pain. Listen to your professionals! That’s what they’re here for.

If you thought this was helpful, I would love to have you help bring transparency to mortgage lending by sharing today’s episode on Facebook or Twitter.

Let’s change the way people shop for a mortgageā€¦forever!

– Mike

PS. To ask a question, get advice, or find out if you’re getting the best deal possible on your loan, just post a comment below. Daily comparison rates, calculators, and other cool features are available in the free Rates in Motion LoanApp by going to your smart phone and clicking on this link, activation code is 9203780002

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