Getting your loan locked down is just one aspect of getting into a new home. Touch of Sold Realty is experienced at aiding new and experienced in all areas of real estate. Contact us if your needs include a real estate pro experienced at the business side of buying and selling.

1 – Organize a list of questions about your loan program

Make sure you bring a list of questions with you if you don't entirely grasp the advantages and disadvantages of all the various loan programs. Oftentimes, it can be hard to know the distinctions between both fixed and adjustable rate mortgages. I or one of my lender contacts will help you understand the advantages and disadvantages of both.

2 – Decide when to lock

Locking in indicates that a mortgage lender keeps to the mortgage interest rates for the loan – ordinarily at the time the loan application is sent in. By floating the rate, you can lock the rate at any time between the day of your loan application and closing. Those who prefer to float conclude the interest rates will decline in the near future. Click here to see the outlook for the next 90 days of interest rates.

3 – Decide if you want to pay additional points to decrease your interest rate

If you opt to pay additional points to lower the rate of your mortgage loan, you will do so by paying for them in cash at the time of closing. Each point is 1 percent of the loan. Click below to use our points calculator. It will assist you with determining if purchasing points is the best option for you.

4 – Bring your paperwork

Acquiring a loan requires lots of paperwork, so you should spend some time getting all your documents together. Click here to preview general information that goes on a loan application.

The "Frequently Asked Questions" section is intended to give general guidance to first-time buyers and others who may be interested in purchasing a HUD-owned home. Additional detailed information, instructions, documents, and forms are provided in other sections of this Website. The primary source of information is HMBI' reference manual Guidebook for Real Estate Professionals which is located on the HBMI website. Potential buyers should contact and work through a HUD-registered broker when purchasing a HUD-owned home.

General Questions/Buying a HUD Home

Q. What is a "HUD Home"?

The Federal Housing Administration (FHA) is the organization of the U.S. Department of Housing and Urban Development (HUD) that insures certain mortgage loans for lenders. If the lender forecloses on the loan, FHA repays the balance of the loan to the lender and the title to the home reverts to HUD. HUD then sells these homes at market value.

Q: How do HUD's Management and Marketing (M&M) Contractors acquire the house?

HUD has assigned the responsibility to maintain and sell the homes to Management and Marketing (M&M) Contractors. They are responsible for the upkeep of the property and the required documentation associated with marketing and selling the homes according to HUD policies and guidelines set forth in the contract with the federal government. The M&M contractors act on HUD's behalf, but HUD retains the title to the home until it is sold.

Q: Who can buy a HUD home? Are they only available for low-income buyers?

All HUD homes are offered without regard to race, color, religion, sex, national origin, handicap, or familial status. Anyone who is pre-qualified for a mortgage loan may offer to purchase a HUD home. These homes are not exclusively for low-income buyers, but most are regarded as affordable for low to moderate-income purchasers within the market areas where they are located. There is an initial period when only owner-occupants are allowed to purchase, after which time investors may also buy. No employee, relative, or business relation of the M&M Contractor or its subcontractors may purchase any of these properties.

Q: How do I start the process of buying a HUD home?

Start by finding a real estate agent in the area where you are interested who works for a HUD-registered broker. Be sure to ask if his or her broker is registered with HUD to sell these homes. These agents can help you get pre-qualified for a loan, show the available homes to you, write a Sales Contract for you to sign and place an offer by electronic bid on your behalf.

Q: Is it possible to get a list of the properties in my area?

You may keep informed about available HUD homes by viewing the property listings on this Web site. Simply click on Property Listings: HUD Owned. This information is real time, so always check before you go out with your agent to see properties.

Q: Does HUD make repairs on HUD-owned homes that are in poor condition?

HUD homes are sold "as is," without warranty. That means HUD generally will not make repairs except to preserve and protect the property or to eliminate a major safety issue. Known defects are reflected in the price and stated in the listing on the Website, as well as on the Property Condition Summary sheet.

Q: How do I make an offer to purchase? What happens after I place a bid?

Your HUD-registered real estate agent or broker must place an offer in the form of an electronic bid on your behalf. Instructions are included in the " Guidebook for Real Estate Professionals " in the " Real Estate Professional " section of HMBI's Website. If your bid offers the highest price, net of closing costs and commissions, above the minimum acceptable price, then the bid will be acknowledged, assuming all other considerations are met. The bid will be the acknowledged bid listed in "Bid Results," allowing your agent or broker 48 hours to deliver a complete contract package to the appropriate Regional Office. The complete and signed Sales Contract package with all addenda, a copy of the loan pre-qualification letter, and your earnest money check. A thorough description of how to appropriately complete and submit the contract package is provided in the " Guidebook for Real Estate Professionals ." Only when a complete and correct contract package is submitted and received on time will the M&M Contractor sign on behalf of HUD as Seller. Otherwise, your bid may be cancelled and the property may be offered to the next highest acceptable bidder or it may be placed back on the market for others to bid.

Q: Can I buy a HUD home as an investment property?

Yes, but owner-occupant purchasers are given priority for an initial period of time that the house is on the market. These are persons who will affirm in writing that they have not purchased a HUD-owned property in the last two years and they will live in the home as their primary residence for at least one year. After the initial listing period, investors may purchase the houses for resale or for rental.

Listing Broker

Q: What is a Listing Broker?

The M&M Contractor has engaged Listing Brokers to list the properties in the local Multiple Listing Services (MLS), place "For Sale" signs at the properties, report on the condition of the houses, supply keys and provide assistance to other brokers and agents who may sell the houses and generally assist to market the properties HUD owns in their areas. They are paid a fee by the M&M Contractor. They may also be a selling broker for the properties. However, Listing Brokers may not purchase any HUD property for themselves or for their relatives or other affiliates. Their agents and employees are likewise restricted from buying or selling to relatives or other affiliated persons or business entities. You may call the Listing Broker nearest you for assistance with any part of the HUD homes sales process. They often offer HUD home buying training seminars that you can attend.

Electronic Bidding

Q: As an owner-occupant, can my agent bid for me on more than one house at a time?
Yes. If you are the highest bidder on multiple houses, the M&M Contractor will choose the one on which you will be acknowledged as the successful bidder. You will not be able to select which house so make sure that any home that you submit a bid on is one that you are prepared to close on! Please read the information on multiple bids in the " Guidebook for Real Estate Professionals ."

Q: How will I know if the bid I submitted is acknowledged as the highest?
Check on the web site in the "Search Offer Results" section the morning after the bid deadline to see if yours is the acknowledged bid. PLEASE NOTE: Having your bid acknowledged does not mean you have "bought" the house nor that it is "sold." The M&M Contractor must receive your complete and correct contract package, review it for accuracy and sign it on behalf of HUD as the seller and only then it is considered "contract pending." When you "win" the bid, all that signifies is that you have the right to submit a contract package within 48 hours. Bids are subject to cancellation until the Sales Contract is signed because all real estate transactions must be conducted in writing, something that cannot occur until your contract package is checked and accepted, as indicated by the seller's signature on the documents. If your contract package does not come in on time, or is found to be incomplete or inaccurate, the bid acknowledgement may be cancelled and the next highest bidder will be given an opportunity to submit a contract package or the property may be placed back on the Internet for another round of bidding. Please see our Disclaimers section for more information.

Q: Whose Social Security Number should be used in bidding? And who signs the Sales Contract?
Your agent will get the buyer's SSN and signature on the HUD-9548 Sales Contract before placing the bid electronically. The same name and SSN must be used on the bid screen. If there is more than one person buying the property together, your agent will use the name and SSN on the bid screen of the person whose financial statement is best from the lender's perspective, adding the other names and SSNs on the contract following the first one. Everyone who is buying and taking title to the property signs the contract and addenda. These bids and contracts are not assignable to anyone else. NOTE: Be sure to sign your name exactly the same way each time on all documents. The names and signatures must match the SSN given for that person.You must include the exact name as it appears on the social security card, including middle initial or middle name.

Q: How do I cancel a bid? And, can I then enter another bid instead?
The bid may be cancelled from the agent’s "My Buyers Center" within the BidSelect system prior to the bid opening. Please print a copy of the cancellation and retain for your records.

Q: I placed a bid on a property, but the next day it is still listed as available. Why?
Bids are reviewed the morning after a bid deadline and results are posted usually before noon. If the property is still available, then perhaps it is still too early and all bids have not been reviewed, so posting has not yet occurred. Check again later. The other explanation is that no current bid was acceptable. In that case, the property would remain available for further bidding and you may bid again.

HUD-9548 Sales Contract

Q: How do I get a copy of the HUD-9548 sales contract form?
The Sales Contract is available to download and print from our website. Go to " Property Listings: HUD Owned", pull up the listings you are interested in. Open the link called "Click Here For More Details." You will see a link which says, "Preview Contract Package." This link will allow you to print off a blank contract and blank addenda.

Q: If my contract is signed, but for some reason I cancel or cannot close, will I lose my earnest money deposit?
Per paragraph 12 of the Sales Contract, which the buyer(s) must initial, the earnest money deposit is at risk of forfeiture if the buyer cancels without good cause. There is an addendum to the HUD-9548 called "Forfeiture of Earnest Money Policy." Please read this carefully because it provides the HUD guidelines regarding what circumstances the deposit will be returned or forfeited.

Q: We sent in our contract package within 48 hours of seeing our bid acknowledged on "Bid Results." How will I know if everything is okay and the contract has been signed by the M&M Contractor?
Your agent sends the contract package by a delivery service that provides a tracking system so he/she will know that it was received in time. If there are any errors or omissions discovered when the package is reviewed, your agent will receive an "Urgent Notice" by email or fax at the number that the agent provided. An immediate response to complete or correct the contract package is required or the bid is cancelled. If there are no errors or omissions, the contracts are put in line for signature by an M&M Contractor employee who has power of attorney from HUD. After being signed, the contract is sent back to the agent by second-day delivery service. Remember, until your agent receives the fully executed Sales Contract, the property is not considered to be officially under contract.

Q: How do I know how to fill out the blanks in the Sales Contract? And what addenda are necessary?
The agent should carefully follow the "Item by Item" instructions for the HUD-9548 provided in the " Guidebook for Real Estate Professionals ." The Listing Broker may be consulted for assistance and there are training seminars offered regularly for agents, brokers, lenders, and others who are interested in selling or purchasing HUD-owned homes. Filling out the contract completely and correctly is the most important part of the transaction process during the early stages prior to closing. Please read and follow the instructions provided in the Guidebook carefully. There is a list of addenda provided and all documents are available in the Broker Information section under "Forms." Agents using BidSelect^TM have "fillable" forms online to aid in the successful completion of the contract package.

Financing a HUD Home Purchase

Q: What kinds of loans are available to purchase HUD homes?
Neither The M&M Contractor nor HUD is a lender. The following are acceptable financing instruments for purchasing HUD houses: Federal Housing Administration (FHA) loans, Veterans Administration (VA) loans (subject to certain restrictions), Conventional loans and cash. Additional information may be obtained in the " Guidebook For Real Estate Professionals " under the "Real Estate Professionals" section of this website.

Q: Why do I have to get a pre-approval letter before I bid?
On behalf of HUD, the M&M Contractor acknowledges the bid that offers the highest net to HUD. However, the bidder must show evidence of the financial ability to close before a contract is entered into. This is to avoid tying up the property with a transaction that is unlikely to close. The " prequalification-letter" must be directly from the lender (not the mortgage broker) giving a current date and an amount of the loan that is acceptable. It should also name the buyer(s) whose credit report was reviewed and approved by the lender.

Q: What amounts should be filled in on the Sales Contract in the financing paragraph, Item 4?
As the Guidebook instructs, the blanks in the FHA portion of the financing paragraph for down payment, loan amount and number of months of the loan are to be left blank or "TBD" may be inserted. If the house you are purchasing was listed "IE" for insured with escrow, you do fill in the amount of the repair escrow in the blank for that purpose. This number is neither added nor subtracted from any of the numbers in the column on the right side of the page.

Q: Can I use Veteran's Administration (VA) financing?
Yes, unless the VA underwriter requires the seller to make repairs prior to closing. This requirement may be in conflict with HUD's policy to sell homes "as-is" except for preservation and protection of the home.

Q: My lender requires a copy of the appraisal and termite inspection report. How can I get these documents?
If you want these documents, the lender must directly request these reports from the M&M Contractor. The requests may be faxed to the regional office.

Closing the Transaction

Q: What closing agent can I use?
Closing Agents are designated by HUD for each area. HUD has these service providers under a separate direct contract that gives them requirements for closing these sales. They are paid by HUD accordingly for document preparation and closing services. Your real estate agent/broker will know who the HUD closing agent is for your area. If you choose to use a different closing agent, you must pay these fees and the HUD closing agent will still be involved to provide services to HUD as the seller.

Q: Will HUD pay for any closing costs on behalf of the purchaser?
In the "Real Estate Professionals" section of this website is a link for " Forms and Instructions." Click there and see "Allowable Closing Costs" that will help answer this question. The wording on Item 5 of the Sales Contract also stipulates that the costs must be actual, reasonable and customary for the area. The ceiling on costs is 3% of the sales price in most states. Certain fees and expenses are automatically paid by HUD and do not have to be included in the total amount filled in on Item 5, such as an FHA appraisal and termite inspection. The Closing Agent and Listing Broker for your area should be available to assist your agent.

Q: How long do I have to close? What if I need more time?
Currently, transactions in most states must close within 30-60 days from the ratification date, the date the M&M Contractor signed the Sales Contract on behalf of HUD. For additional time, except in rare instances, an extension request signed by the purchaser and an extension fee paid by the purchaser must be submitted by your real estate agent/broker to the Closing Agent. More details as to the amount of the fee and the procedures to follow are provided in the "Guidebook for Real Estate Professionals."

Direct Sales to Non-Profit Organizations

Q: What type of non-profit organizations (NPO) can purchase HUD homes?
HUD requires that non-profits submit an application describing their housing related mission and providing other information about their organization's structure, financing and management. After this application has been reviewed and approved by HUD, the NPO is issued a Name Address Indentifier NAID# and may buy HUD homes directly from the Website for their purposes. The types of non-profits vary widely, but they are almost always an IRS 501 (c)(3) corporation.

Q: Are nonprofits eligible for a discount? What other benefits do they qualify for?
Depending upon the location of the houses and the number of houses purchased and closed at one time, a non-profit may qualify for either a 10%, 15% or 30% discount at time of closing. There is also an initial 5-day listing period when homes that are eligible for this program are listed separately, giving a special opportunity for non-profits and other direct purchasers only to buy.

Good Neighbor Next Door

Q: Who qualifies for the "Next Door" programs and what is their discount?
Only full-time law enforcement officers with arrest authority, full-time licensed teachers or administrators in public or private pre K-12 grade schools, full-time Emergency Medical Technicians and full-time Fire Fighters may purchase directly through the Good Neighbor program. Their discount is 50% of the list price. Closing costs and broker commission costs can be added to the loan amount if the buyer uses FHA financing. There are other restrictions the buyers must follow. For example, they must reside in the home a minimum of 36 months. For more information and requirements, please see the HUD website.

Q: Can a real estate broker receive a commission for working with an GNND buyer?
Yes, but in no event will HUD pay selling broker commissions of closing costs. A purchaser using FHA financing through the GNND program may include reasonable and customary closing costs within the amount borrowed. These amounts are not properly considered to be part of a required down payment.

The Kitchen

Many experts recommend that you focus on the kitchen first when preparing your home for sale. For many potential buyers, the kitchen is the most important room in the house. Since the kitchen has the power to make or break an offer, you should do everything you can to enhance it before showing your home to buyers. And, most experts agree that next to painting, improvements in the kitchen are the most profitable. Remember though, money you spend here is a cost of selling, you don't want to do a full remodel, but rather take some affordable steps to show what you have in the best possible light.

Freshen up the cabinets. Replacing the cabinets is expensive and probably doesn't make sense. But you can paint them, or put new, modern looking pulls on them for very little money and give them a fresh look.

In short, buyers will be quick to notice any shortcomings in your kitchen. So you want to do everything you reasonably can to freshen up your kitchen and give it a new open large look.

Just as with any property purchase, your wisest move is to hire a professional real estate agent. For more information, simply contact me through my site or e-mail me. I'm happy to address any questions you have regarding real estate foreclosures.