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What is a HUD home and can I buy one in Washington?
HUD is the Department of Housing and Urban Development. HUD gives funding to local agencies to administer the Section 8 and Public housing programs nation wide.
A HUD home is a 1-to-4 unit residential property acquired by HUD as a result of a foreclosure action on an FHA-insured mortgage. HUD becomes the property owner and offers it for sale to recover the loss on the foreclosure claim. Anyone who has the required cash or can qualify for a loan (subject to certain restrictions) may buy a HUD Home.
Are there HUD houses for rent?
Actually, when someone says that they are looking for a HUD house to rent, they have confused this process with a rental assistance program. HUD houses for sale are initially offered to owner-occupant purchasers (people who are buying the home as their primary residence). Following the priority period for owner occupants, unsold properties are available to all buyers, including investors. HUD does not warrant the condition of its properties and will not pay for the correction of defects or repairs. Since the new owner will be responsible for making needed repairs, HUD strongly urges every potential home buyer to get an inspection from a licensed professional home inspector prior to submitting an offer to purchase.
If you are interested in acquiring a HUD Home for sale that is in need of repair, you may be interested in applying for an FHA 203(k) Rehabilitation Loan. When a homebuyer wants to purchase a house in need of repair or modernization, the homebuyer usually has to obtain financing first to purchase the dwelling; additional financing to do the rehabilitation construction; and a permanent mortgage when the work is completed to pay off the interim loans with a permanent mortgage. Often the interim financing (the acquisition and construction loans) involves relatively high interest rates and short amortization periods. FHA's 203(k) Rehabilitation Loan is designed to address this situation. The borrower can get just one mortgage loan, at a long-term fixed (or adjustable) rate, to finance both the acquisition and the rehabilitation of the property.