HUD-Owned Homes Are One of Real Estate’s Best Kept Secrets

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For a few years now the real estate market has been heavily leaning on the buyers’ side with a lot more inventory than there have been buyers and unfortunately because of the economy we are going to see more of the same in 2012. But if you’re a buyer, this could not be a better time for you, especially with interest rates still as low as they have ever been!

HUD-Owned Properties Are Not Always Money Pits

The single biggest hang up that most homebuyers have about looking at HUD-owned homes is that they perceive the properties to be money pits waiting to happen. The truth is that there are a lot of properties in perfect or at least near-perfect condition.  At best these properties require some rehabilitation but nothing that will cost too much or involve lengthy time-consuming projects.  In fact, aside from a few cosmetic issues like paint, flooring or fixtures, HUD-homes most often have solid structure and very desirable amenities, floor plans and features.

Homeowners Can Manage Fix-Ups With the FHA 203k Home Reno Loan

There will be times that you will come across serious fixer-upper homes in this category however you will likely get the property at a steep discount and with the help of a 203k loan you can build in renovation costs into your mortgage.  The best advantage of this is that you can customize the home to your needs, doing anything from installing a high-end kitchen and bathrooms to finishing your basement or even landscaping. One of the best features of this loan is that it also facilitates owners to live elsewhere for up to 6 months while rehabilitation takes place, keeping up mortgage payments in the interim.   Add to that the fact that you will get the same low interest rate on your 203k loan and buying a HUD home makes even more sense!

Deep Savings Make HUD-Owned Homes Worth a Few Cosmetic Fix-Ups

When you consider the financial benefits of buying in today’s market and buying through HUD with the historically low interest rates available out there, it makes good sense to browse HUD homes.  Most buyers receive deep discounts on their property – discounts that add up to thousands of dollars and many times even tens of thousands of dollars.  When you factor in the low interest rates and as a result buyers being able to afford much more house for the same monthly payment amount, dealing with a few cosmetic concerns is well worth it.
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To begin your search for HUD homes, browse the official HUD search engine of all properties listed nationally, by state.  Keep in mind that in order to bid on any of these homes you must go through a registered HUD broker as all real estate agents are not qualified to handle these transactions.  Getting a great deal, sometimes as much as 40% below market value, is worth a little extra effort – so why not start your search today?

Is Now a Good Time to Buy?

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I get asked all the time whether or not now is a good time to buy. Honestly, now is a great time to buy. Never have I seen sellers more willing to negotiate than I do right now.

First of all, we have fantastic mortgage rates. These rates are at all time low. The average national interest rate is at 4.6% for a 30 year fixed rate loan while the 15 year rate is around 3.78%. Could we have imagined these kinds of interest rates just a few short years ago?

As an example, if you took out $300,000 loan for 30 years at a fixed rate of 4.6%, your payment would be around $1,537 per month. If you decide to wait another year hoping prices will go even lower and the rate rises to 5.7%, you would need home prices to fall another 12% to come in at same mortgage payment. That's more than double the price decline most are expecting to happen.

I truly do not believe that interest rates will be going much lower. In fact, most experts predict that they will be going back up to just under 6%.

I also don't foresee prices falling another 12%. If anything, prices are stabilizing. In many areas, prices are actually starting to inch upward again.

Mortgages for expensive homes will fall to $625K for a conforming loan very soon. Right now, lenders can do over $700K on a regular conforming loan without having to worry about getting into a non-conforming situation.

For buyers, there is also a lot less competition right now. It's the perception of many buyers that prices will fall lower, but most experts think there may be an additional 5% decrease at most in some markets.

In Connecticut, some areas are already seeing upward pricing trends. In other words, don't sit around waiting for the prices to adjust downward as well as the interest rates. They are so super good right now that it doesn't make sense to keep waiting it out in an already fantastic market.

For renters, new studies are showing that renting really isn't such a great deal right now. Demand for rentals over the last few years has increased because of the rise of foreclosures and less renters looking to buy. However, the supply has not kept up which means that rental prices have gone up. Why rent when you can buy a home and pay less each month?

Experts also believe that qualifying for a mortgage is likely to get harder instead of easier. As the mortgage market starts moving into the private market and away from Fannie Mae and Freddie Mac, many believe that tougher lending standards will be created.

As always, if you have real estate questions or want to get pre-approved for a mortgage, call or email me. I am also always happy to sit down with you and go through the whole buying process with you at any time.