You have likely heard advertisements regarding HUD homes for sale in St. Louis, yet if you are like most of the clients that we here at TDD Attorneys at Law work with, you know little about them or why they are designated as such. In some cases, buying a HUD home may help get you into your dream house at a starter home price. 

What exactly are HUD homes? These are homes that have been foreclosed where the mortgages held by the previous owners were insured by the Federal Housing Administration. The lenders of those mortgages can recoup their losses by filing a claim with the FHA. The U.S. Department of Housing and Urban Development (which operates the FHA) then takes control of the home. The HUD will then try to sell the home, first as an owner-occupied property, and then (if no buyers are found in the first listing round) an investment property. 

Per the HUD’s website, all you need to purchase a HUD home is to have the required cash or be able to qualify for financing. Although the HUD does not offer financing, it does place certain restrictions on the loan packages offered by those who do. You typically need to be able to provide a 3 percent down payment and show proof of steady income or employment for at the past two years. HUD homes are sold through a bidding process, with your bid being submitted through your agent. 

HUD homes are sold “as is,” so it is strongly recommended that you order a home inspection before submitting a bid. If repairs are needed, the HUD may reduce the fair market value asking price of the home to reflect those costs. 

More information on preparing to buy a home can be found here on our site.