HUD Homes and the state of the investment community

I'm helping a young guy buy his first house. More than neighborhood, more than schools, more than house style, he wants value. I can't blame him. A low/affordable mortgage payment and the security of knowing you've got instant equity are two of the most comforting factors I could think of when buying a home.
He asked about HUD homes. Everyone asks about HUD homes. Everyone wants a deal.
Here's the skinny on HUD Homes:
- They are hard to come by
- They go quick
- They go for list price or above most of the time
- They need work
- They aren't usually in a neighborhood where the clients asking me about HUD homes want to live
- You must be pre-qualified by a lender.

That said, if you find the right home, it can work out great. If the house is more than $49,0000, you'll need $1,000 in a deposit. You could lose this deposit if you back out of your offer later. Oh yeah, did I mention that HUD homes come AS IS ? Yep, the only person making repairs will be you. Of course you are allowed a home inspection and if that home inspection turns up a suspect foundation, well then you can probably get your $1,000 back and move on.

The first 10 days they are on the market, they are open only to owner-occupants. That means you have to live there. You have to sign a document swearing you'll live there for 12 months.
You also have to have a Realtor to see the inside of the home. You can view the home anytime, generally. They go fast though, real fast if they are in desirable areas or are terrific bargains.

The home I'm looking at for my current client is listed at $60,000. It sold for $80K in 1996 and the county has it valued at $102,000 for tax purposes. Yes, that's a lot of equity. If my client likes it, we may put in a bid tonight. Then you wait until 4:00 the next day to see if your bid was the winning bid. If so, you're in contract.

Call (324-4357) or email to find out more about HUD homes. I don't do too many but I do recognize value when I see it. I'm sure you do too.

This week's rates from a local bank:

Conventional
30 year 5.75
15 year 5.25
7/23 5.125

Conforming ARMS
3/1 5.375
5/1 5.75
7/1 6.00

Interest Only
30 year 6.625
5/1 ARM 5.875
7/1 ARM 6.125