Many first-time homebuyers have the same types of questions about the best methods for obtaining HUD Homes and an FHA Home Mortgage. Finding the proper answers can often be a challenge. But here we will try to answer as many of them as possible, clearly and easily.
What is meant by a “HUD Home”, and why are they so popular?
Homes purchased through the HUD program have mortgages that are federally insured. If for some reason the homeowner is unable to meet his or her financial obligations, the lender will begin foreclosure proceedings. HUD pays the remaining balance, essentially buying the house outright. The home is then resold quickly and as close to current market value as possible.
What if I have bad credit or a very small amount of money for the down payment?
Even those with poor credit and minimal cash reserves might still be a very excellent candidate for one of the HUD or federally funded mortgage programs. A good place to start is by contacting your local HUD home loans counseling agencies or your local government for first-time homebuyers’ assistance programs.
Are there special types of financial assistance available for single parents?
Being a single parent does not make you ineligible for home ownership. However, you will not have the added benefit of a dual income as leverage to acquire a higher priced home. A good place to start is by getting pre-qualified by one of the local lending institutions. This will make the process much faster once you do find that perfect home. Contacting your local government and HUD-related counseling agencies can also provide some very valuable guidance.
How much money does it cost to actually buy a home?
In general, first-time homebuyers will have to come up with enough money to cover three different types of costs. “Earnest Money” is the money that you present to the current owner when you make an offer on the home, proving that you are serious about buying his property. The “Down Payment” amount will vary depending on which type of the many available home loans that you actually acquire. This is usually based on a percentage of the total price of the new home, somewhere in the range of 10-20%. “Closing Costs” are the third area, usually ranging from between 3-4% of the total sale price. However, with a HUD mortgage, HUD pays these closing fees for you.
How do I know if I am eligible for a loan?
Contact a HUD program counseling agency. These professionals are experts at helping first-time buyers decide when is the right time to buy, based on your current income and budgetary constraints. They can also help you with brokering services to obtain the best possible loan at the lowest possible monthly mortgage payments.
Are there other hidden costs with homeownership?
There will be monthly utility bills, which may be a new responsibility for first-time homebuyers. And in some cases there may be condominium association fees or homeowner association dues required. There will definitely be property taxes associated with all types of home loans and perhaps county and city taxes as well. Your mortgage broker can be able to help you determine all of these potential costs up front before you buy.
Marimark Mortgage is an approved FHA Mortgage Broker (FHA is part of HUD).
As a first-time homebuyer, you could benefit from purchasing a HUD home. But even if you don’t purchase one of these homes, you may benefit from an FHA Home Mortgage.
When you are ready to purchase a home, we would appreciate the opportunity to help you.