Today’s guest post is from Jim Vogel at ElderAction.org who discusses four advantages for seniors who buy a HUD home.
If you are a senior who is in the market for a new home, you should consider buying a HUD home. HUD homes are those that were purchased using an FHA loan that then fall into foreclosure. While buying a HUD home is a little different from purchasing another type of foreclosed home, it is a fairly simple process that you can do on your own or with the help of a real estate agent. There are several advantages to buying a HUD home for seniors, and we highlight a few of them below.
1. It Is Easy to Purchase a HUD Home with FHA Financing
HUD homes are put up for sale when their owners default on an FHA loan. Because FHA wants to get the highest return from the resale of the home, they often offer special incentives to seniors who purchase a HUD home with FHA financing. Keep in mind that you need to qualify for an FHA-insured loan through your lender because FHA does not make loans directly to homebuyers. It is fairly common for FHA to offer more attractive down payment terms or other incentives to a senior buying a HUD home.
It also is helpful to purchase a HUD home with the help of FHA because they offer Property Rehabilitation Mortgage Insurance, or a 203k loan, in conjunction with HUD. This program enables your lender to set aside a portion of your mortgage in a repair escrow that you can draw from to make necessary repairs. Seniors should discuss this option with their lender to determine whether FHA-insured financing and FHA 203k loans are right for their situation.
2. HUD Lowers Home Prices if No One Makes an Offer
Any time you purchase a new home, you are taking a gamble. For seniors considering buying a HUD home, you may want to hold off on making a bid during the offer period if you think the home is priced a little too high. If the home is not sold after the first offer period, buyers can submit a bid any day of the week, even on weekends and holidays because bids open the next day after the offer period ends. And, HUD lowers the price of homes that do not receive an offer within a certain amount of time. HUD continues to lower the price until an offer is made and accepted. Of course, not making an offer lowers a senior’s chance of getting the home, but if you think the price is too high you can take your chances on HUD lowering the price after a bit of time.
3. HUD Home Purchases Include Some Financial Benefits
In addition to the fact that HUD homes often are less expensive because they are foreclosed properties and are not subject to bidding wars between investors and owner-occupants, there are some other financial benefits of purchasing a HUD home for seniors. First, real estate brokers prepare and submit your bids and deposits without charging you. HUD also pays a 6% sales commission to the agents involved in the sale and pays up to 5% of the closing costs, which can save senior home buyers thousands of dollars. HUD homes also are appraised, so you don’t have to pay out of pocket to have an appraisal completed for the property. Finally, HUD home buyers may qualify for 3% down payments instead of the typical 20% down payment required for purchasing other homes.
4. HUD Homes are Easy to Locate
Seniors who become frustrated by finding only a few homes for sale in their area will be glad to know that there typically is an abundance of HUD homes for sale all over the country. In fact, with a simple internet search via HUD Homes, you can search for homes by clicking on a state, searching to see available properties that are eligible for HUD special programs such as Good Neighbor Next Door, or complete a quick form with criteria such as the number of bedrooms and bathrooms you want in your new home. As people struggle to pay their mortgages during the economic slowdown, seniors will find even more HUD homes available for purchase.
There are several advantages of buying a HUD home for seniors including financing through FHA, getting lower prices after homes are on the market for a certain amount of time, accessing financial benefits for senior home buyers, and easily locating homes for sale across the country. Better yet, with all of the money you save from purchasing a HUD home, you can find a moving company to help you make your big move.