A HUD Foreclosure is a property that is owned by the government. These homes are offered to low and medium income families but you must qualify in order to receive them and be pre-qualified for a loan in order to bid on a HUD Foreclosure home. Anyone who meets the loan requirements can qualify but the Department of Housing and Urban Development will give priority to potential homeowners who intend to use the house as a permanent residence. They also give priority to teachers, emergency personnel, police officers, and firefighters in order to relocate them to areas being upgraded by the HUD Foreclosure program.

When you purchase a HUD foreclosure home you are purchasing the property as-is. However, the HUD foreclosure program prices the homes very low, and has financial aid programs for purchasing and closing costs, and financing the cost for repairs.

You will have to provide a letter of loan pre-approval from your bank in order to bid in a government HUD Foreclosure auction. This letter needs to be good for a period of sixty days. You provide the pre-approval letter to the real estate agent that has been authorized as a qualified government approved lender. You can get the HUD Foreclosure listings through the authorized government real estate agent who will actually be doing the bidding for you as well. The Realtor should have other helpful HUD foreclosure information to aid you in the auction process.

The Department of Housing and Urban Development, does not issue the loans to obtain the houses that are auctioned off. What they will do is insure the lender against any default on the loan.

The bank will then issue an appraisal for the home you are intending to buy to make sure it meets minimum housing standards and that it is marketable. (They will not finance something that can not be sold such as condemned property) The appraisal will also give you and estimation of the value of the property. One thing you also need to have done is a home inspection and factor in things as fixer up costs; refurbishing, repairs, maintenance and add on costs.

Even when you factor in the costs of repair, HUD foreclosure homes can be a profitable investment since these homes are sold well below market value to account for the repairs that will be needed on the property.

By: Tony J Lorenzo

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