There’s a common misconception that everything that is subsidized or government-assisted is just plain hard to get is a myth and we are going to bust that myth today. We are going to show you a simple four-step process that will help you get the HUD house of your dreams:
Search for a HUD Residence Your first step to getting a HUD house is to begin your search using the HUD Home Store, which has the listings that you would find most convenient. You can customize your search based on the area that you are interested in moving to and it will give you the details of all the local brokers that work there (who would know more about the area’s properties and financing options). If you happen to be a first responder or a teacher, the “Good Neighbor Next Door” program is a great initiative that gets you 50% off, if the property is located in a “revitalization area”. Realtors or mortgage brokers are extremely helpful in advising you on which programs would suit you best and how to qualify for them.
There are some other tools that you can use to get a HUD property, but by far the most useful and supportive website that you will encounter is the Housing Search Assistance Toolkit – HUD Exchange which offers all the support you need with the sophistication that you need to get find and secure a property quickly.
Placing a Bid on a HUD House: The next step that you need to take after finding a HUD house (given the search method we presented above) is to place a bid on the property you are interested in via a licensed HUD broker. Once the broker places the bid for you, the only way you can get the property is if you are able to afford it and if are eligible for financing the property. Before placing a bid, there are a couple of things you should know. First, before placing a bid, you need a mortgage or prequalification letter from a legitimate lender and if you want to secure the sale with a cash payment a bank statement will have to be provided in order for you to be able to bid. Second, it’s important to know that HUD when you get the property you will get it as is without any repairs on it. Third, the majority of the properties are available during the “priority period”, after which it may prove difficult or long to find another HUD property for you. So do your best to ensure that you make the priority period.
Financing Your HUD Home: Along with offering a HUD House, financing options are also available using Federal Housing Administration (FHA) loans, but in order to qualify for the loans the following needs to be considered: your financial record, your employment history, your credit score, your debt-to-income ratio, and your future plans that you have for the residence. Before you begin to apply for an FHA loan, try to get a general understand of where you stand and take note of the following recommendations:
- You must have a stable income which is documented and verifiable with bank statements and/or pay stubs.
- You have to be able to afford the house payment and some experts recommend that one way to assess this is that your mortgage payment should not exceed more than 35% of gross income.
- You have a good credit history and a FICO score in the range of 560-640.
- It is recommended that you get a property which values less than the FHA loan limit.
Private lenders are also a viable financing option. Before completing the purchase, a detailed inspection of the property is highly recommended to ensure that the structure is in good condition.
Holler “Mayday” for Section 8 Assistance: The Housing Choice Voucher Program (also known as Section 8 Assistance) provides a voucher that settles an individual’s expenses that are over 30 percent of an individual’s income. If you were accepted into the Section 8 Assistance Program, $300 would be taken from your income and committed to the house expense given that you make $1000, but the voucher would provide the remaining 700 dollars. It’s worthy of noting that how much the voucher will actually give is determined on a case-by-case basis. The downside of Section 8 Assistance is that the tenant will be given any money from the Housing Authority for damages on the property, since those who have Section 8 Assistance are consider higher risk.