What is a HUD?

HUD refers to U.S. Department of Housing and Urban Development. To fight poverty during U.S. President Lyndon B. Johnson's period, he established this Housing and Urban Development or HUD Act No. 42 U.S.C. 3532-3537. This agency is in charge of America's housing needs which develop neighborhood and implement fair housing laws.

HUD has a history of many accomplishments in building thousands of community and helping millions of American become home owners. It has been assisting many Americans for the past 40 years.

To make things simpler, a HUD home is basically a house that could not be maintained financially by its owner. When a person with a HUD residence has insured mortgage but was not able to meet the payments, the lender closes out his home.

HUD would then pay the lender what he owes and HUD acquires full rights of the property. And as immediately as possible, HUD would list it in the market as legitimate for purchase.

When the listings of homes are posted at the internet, a HUD house is presented for sale. After placing the house on market, real estate brokers from all over the states could propose contracts for acquisition.

Because of lack of employees to handle all of clients from the many HUD properties, the agency makes use of real estate brokers to assist the prospective buyers.

After you have found a real estate agent to handle your market and legal matters, your real estate agent should be the one to propose a bid for you. These HUD homes are usually sold within an offer period where all interested candidate would place each of their own bid.

At the end of this period, the person with the most reasonable and highest bid is accepted which would mean that the house would be his after dealing with all the legal matters.

These HUD homes give priority to people who are purchasing the house for primary residence. After these people in the priority list have been entertained and have been able to purchase homes, the unsold HUD properties will become available to all individual buyers and shareholders.

Buying a HUD home has several advantages and disadvantages.

These homes range in price, but half of the houses for sale are affordable for the common American. The price of each house may vary depending on the area which the house is located.

In connection to the price of the houses, these HUD homes are sold without warranty. The agency does not cover renovation of the house, electrical and mechanical upgrades and furnishings. The price of the house however, would decrease reflecting that the house needs considerable fixing up.

However, HUD does not grant financing to buyers of HUD Homes. These buyers must be able to secure their finances through their own money resources or a mortgage lender. On the contrary, the agency helps in assisting you with the perfect loan suitable for your financial requirements.

Deciding to buy a HUD home comprises a reduced amount of paperwork and red tape than buying any normal type of house. Because these homes are sold as soon as the previous owner ceased payment, the paperwork process and legal matters are handled with precedence.

In purchasing a home, whether it may be a HUD or any other house, make sure you know the basics on real estate laws and the finances suited for your purchase. Analyze the property first before deciding to buy it.

About the Author

James Monahan is the owner and Senior Editor ofHudCentral.com and writes expert articles about HUD.