HUD Foreclosure Homes

With the housing bubble bursting all around us, and adjustable-rate mortgages putting immense pressure on millions of homeowners, foreclosure rates are at an all time high. While this is indeed unfortunate for those who have lost their homes, it cannot be ignored that it's a unique opportunity for many people to buy a home well below market value. As a matter of fact, with a reasonable amount of patience and a little legwork it should be possible to locate and purchase a home at a 20- to 40 percent discount.

Homes go into foreclosure when the owner 'defaults', or fails to meet his or her financial or other stated obligations with respect to the property's mortgage agreement. If the default is not cured, the lending agent is forced to repossess the home and sell it to pay the outstanding debt. It's important to realize that these companies are lenders; they have no desire to be in nor are they organized for the business of owning real estate. It's therefore in their interest to dispose of the foreclosed property as quickly as possible; depending on individual circumstances they may even be compelled to sell for less than the amount owing on the defaulted loan.

Most bank-owned foreclosures are marketed through a local realtor; a check of their listings will reveal such opportunities. Another ready source of available foreclosed homes is the U.S. Department of Housing and Urban Development's (HUD) website. From this site lists of properties in every state can be found that have been acquired by HUD through foreclosure of an FHA mortgage. HUD takes possession of the properties and sells them in order to recover its losses on the foreclosure claims. The website also provides instructions on how to make an offer on a property. The process involves submitting a sealed bid through a HUD-registered realtor. However, financing must be approved and arranged beforehand when bidding on HUD properties, so shop around to obtain adequate financing before making a bid.

It's very possible to purchase a house at well below its market value. But it's also important when buying a home at a deep discount to do as much research on the property as is practical before making the actual purchase. HUD-foreclosed homes are sold "as-is"; therefore it might be wise to have an inspection done on the home before buying it. Some foreclosed homes may suffer from neglect over the previous six- to twelve months and therefore require a small amount of maintenance. Still others may require major repairs. Often, however, a bit of paint, new carpet and other cosmetic improvements are all that may be needed to bolster the property's value dramatically.

Whether you're a new homebuyer, shopping for a larger place, or looking for investment real estate, foreclosed properties can provide a tremendous opportunity to obtain a quality home at a great price. Visit the HUD website to see the properties that are available in your local area. They can be an excellent way to save money and 'buy right' when purchasing real estate.