Investing In Foreclosed HUD Homes
January 24th, 2007 by 
Joseph Smith
You may not know this but many real estate investors have profited from investing in HUD homes foreclosure. These properties are owned by the Department of Housing and Urban Development and the agency Federal Housing Administration (HUD/FHA).
A property becomes an HUD home when a real estate loan is obtained from an approved HUD lender. The property is considered to be insured by the HUD/FHA thus protecting the lender’s financial interest. Due to reasons such as loss of job or divorce, some HUD home owners fail to meet their monthly mortgage payments. When this happens, the HUD home will now be foreclosed.
The HUD/FHA pays the lender the balance of the loan, foreclosure cost, accumulated interest and legal fees. Once the lender is paid off, the property is now considered to be an HUD home foreclosure. These HUD homes foreclosures are sold "as is" and usually on a cash basis. Most often than not, the HUD/FHA sells the HUD homes foreclosures through authorized real estate brokers such as Foreclosure Deals who are paid based on a commission scheme.
Since HUD-authorized real estate brokers receive the list of HUD homes foreclosures before the public, they have a certain advantage. Buyers can only acquire these great properties thru HUD-authorized brokers. The advantage of buyers dealing with a broker is that they can offer you a very nice deal as well as great HUD foreclosures to choose from.
Like any property, caution should be taken. Check the property and its neighborhood thoroughly. Hire a professional inspection service if necessary. Aside from the discounts you get from purchasing HUD homes foreclosures, you can also save on closing costs. Ask your broker if the HUD home foreclosure is eligible for an FHA-insured mortgage with a built in repair loan. You will save thousands of dollars if it is.
