Question on HUD homes

[Kozmo]

This is not particularly about getting a loan or credit scoring...but does anyone know about purchasing HUD homes?

I know a little but when you go to the website, some houses say "Extended" or "exclusive". When you hover over it..."exclusive" says "owner occupants, non-profits, and government agencies"

That means that only they can buy the home? **bleep** for?

Beyond confusing to me.

[jinca]

We just closed on a HUD home a few weeks ago. I'm not an expert, but what was explained to me was that for a certain period of time only O/O buyers can bid. After that period expires if HUD has not accepted an offer, investors can bid. 

[Kozmo]

I don't understand what owner occupant refers to...the original owners? Why would they put a bid on a house they lost? and how could they ever get financing to do so?

[StartingOver10]

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@Kozmo wrote:

I don't understand what owner occupant refers to...the original owners? Why would they put a bid on a house they lost? and how could they ever get financing to do so?

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Owner occupant, when you are buying a HUD home (or bank owned or short sale even) means that as the buyer you intend to own and occupy the residence as your primary residence. In other words, you are going to live there and not flip it or use it as a vacation or investment home.

Since you are looking to buy a home to actually move into, it means that you are given a better chance and first dibs at buying the home.

It has to do with stabilizing the neighborhood with owner occupants rather than filling it with investors that are flipping or investors that are renting.

Its a good thing for you.

[Kozmo]

Ahhh that makes much more sense.

Thanks for clarifying that! Off to bid I go!

EDIT: One more ?

When it lists an insurance escrow for repairs...that means that's how much I would have to take from the loan for repairs? Or thats how much they give you for repairs.

[StartingOver10]

Be very careful with HUD escrows. This is money that is being deducted from your loan and held in escrow in accordance with an agreement by you to repair certain item(s) after closing but before a particular date. There are terms to meet the escrow. Generally you will have to put up not only the repair costs but an additional 20% of the repair amount into escrow. If the repair is done correctly, passes inspection and you prove you have paid the repair, then the escrow is released to you as a reimbursement. There are conditions to the release of funds. However, if you fail to meet the required date for repair those funds can be taken to have someone else complete the repair. That other person would then be paid the repair escrow. Search for repair escrow and hud to get a copy of the agreement so you know what is required. The "insurance" that is referenced is so the property meets mortgage insurance requirements.

[Anonymous]

Also, you have to bid through an authorized HUD agent - you cannot bid yourself. My local Remax had one on site.