How To Buy A Foreclosure - Pt. 2
If you haven't read part one, please do so first.
You successfully won the bidding on a HUD home, and are undergoing closing procedures. Congratulations! It's an exciting time as the days draw nearer to closing on your real estate investment or home. This is the most important part of a real estate transaction. You must be certain that all deadlines are met. Understand the rules for closing, to ensure that it will take place. Necessary preparation is required before purchasing any piece of real estate, keeping risk involved with the process at a minimal.
In this article I'll go over what to do with the real estate inspection results, closing the deal, and getting the keys to your new property.
Post Inspection
So you have an inspection report that reveals some ""not-so-friendly" repairs that are mandatory. Realize, that all HUD homes are sold "AS-IS". HUD does not make any repairs under any circumstances. What does this mean? You will forfeit your earnest money if you have to exit the contract due to the condition of the home!
There are circumstances that would enable you to receive at least half of your earnest money back. FHA loans usually require certain saftey issues to be repaired on the home before they will provide financing. If you have an FHA loan for your HUD home and they determine that it is not in livable condition - they will not provide financing for you. A buyer's failure to secure financing (as long as it's submitted in writing) is a reason for you to get your earnest money back.
If you were pre-approved for a mortgage (be it FHA or conventional), meaning your lender has given you a gaurantee that you can get financing for a specified amount, and your financing falls through despite good faith efforts, you will receive 100% of your earnest money. If you were only pre-qualified for a mortgage, meaning your lender has given you a conditional approval, then you would only receive 50% of your earnest money back.
Getting Financially Approved
Play if safe! Get pre-approved before shopping for a HUD home to lower the risk of losing your hard earned money due to unforseen required repairs by your lender.
You may also receive 100% earnest money back if you had a death in the immediate family, or there has been a serious illness, or that maybe the primary breadwinner in your family lost his/her job.
Closing on your Home
We've made it! You may finally close on your home! We will be closing at the title company designated by HUD, where you will be signing various documents from the title company and from your lender that will make the deal final.
Most of the lender required document questions should be direct to your loan officer, as each lender has different loan documents to sign at closing. He/she should be able to answer them in full detail.
The Keys to your Home
On the day the transaction closes, we will contact the listing broker and property management center to inform them that the title has been transferred, and you will be moving in immediately. We will also instruct them to change the status of the listing inside our MLS system. We may open the door to your home, but you may be surprised that in this deal, we do not give you the keys!
When homes become listed by HUD for sale, all the locks are keyed on a master key. These keys are available to HUD approved representatives (such as the Boyenga Team) and will open any HUD listed property. It is your responsibility after closing to have the home locks re-keyed as quickly as possible! You may call a locksmith or we can provide the contact information to one for you.
We hope this article was informative and was able to provide insightful information about purchasing a foreclosure for you. If you have any additional questions about HUD homes, please feel free to contact us at any time.
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