Nov 15, 2024 Current Resources

The HUD Home Store: What It Is And How To Use It

(TheDailyCurrents.com) – As a homebuyer looking to purchase a foreclosure, high chances are that a wealthy real estate investor might snatch it up first. For that reason, the government allows homebuyers to escape that frustration through the HUD home store.

The HUD home store provides many opportunities for homebuyers, and the agency could save you thousands of dollars. Here’s a deep dive into what exactly the HUD home store is and how the public can use it to find more affordable housing options.

What Is a HUD Home Store?

HUD is an acronym of The US Department of Housing and Urban Development – a government housing agency established in 1965. President Lyndon B. Johnson started the program as part of the “Great Society,” which aims to eliminate inequality and poverty in the US by providing affordable housing in cities.

A HUD home is a foreclosed property for resale under the HUD home store and is owned by the US Department of Housing and Urban Development. The government reclaims foreclosed homes and then puts them up for auction or sale on the HUD home store to recoup the monetary loss that results from the foreclosure.

The HUD home store presents homebuyers with great opportunities to snap up their dream houses at steep discounts. However, homebuyers must always be prepared to act quickly, especially when eyeing prime locations, because houses in prime locations often see a ton of interest.

How HUD Impacts Home Ownership

HUD, being a cabinet-level federal agency, also oversees the Federal Housing Administration. Through the FHA, the program helps buyers who do not qualify for conventional loans that offer affordable mortgages. If you’re a low-income homebuyer or have bad credit, the FHA mortgage insurance program gives you the ability to qualify for a loan secured by the government.

With an FHA loan, a homebuyer can get a home with a down payment of as little as 3.5% and as low as a 580 credit score for government-backed loans. However, if a buyer chooses a non-government-backed loan, the lenders often require a minimum credit score of about 620. That said, the HUD home store can be an inexpensive option for first-time homebuyers.

How to Use the HUD Home Store: The Home Buying Process

If you’re interested in buying a HUD home, it’s important to understand what the buying process looks like and how it differs from purchasing a traditional home.

HUD homes are listed on the HUD home store and not on a conventional real estate website like other homes.
Also, unlike traditional properties, the buyer must work with a HUD-approved and licensed real estate agent to view and bid on HUD homes. The buyer can search by zip code or state to shop for a HUD property.
And because the HUD home store sells homes on auction, 30 days are given to allow bids from owner-occupant homebuyers, governmental entities, and nonprofits.
In most cases, the buyer provides earnest money with their offer to act like a deposit when buying a HUD property.
Once the period elapses, HUD reviews the bids and selects the highest offer. In case all the bid offers are deemed not high enough, HUD might extend the process to open room for interested investors.

If a home buyer wins the bid, HUD contacts the agent to inform the buyer and provide them with a settlement date. The buyer then gets about 30–60 days to close the deal. The earnest money often applies to the closing costs or down payment, but if HUD rejects a buyer’s offer, the earnest money is returned.

The HUD home store offers a variety of properties for low-income homebuyers to choose from. However, it’s important for homebuyers to inspect before closing on a HUD property in order to know the types of repairs they’ll need and determine whether the home is worth buying. That’s because the HUD home store sells homes “as-is,” meaning that a home is sold in the condition it’s in and might require lots of renovations or repairs.