Financing a HUD home with a HML?

My credit is poor, so I do not think I can qualify for a traditional mortgage to obtain my first home. I have noticed several HUD homes for sale in my area that seem to be very good deals based on the prices of similar houses in the area. The HUD has several good programs available to help a first time homebuyer such as myself, but they seem to all be contingent on me having financing lined up first.

If I were to find a property for cheap enough is a HML a viable strategy for me to obtain my first property if it is a HUD home? Or must I find an abandoned home or someother motivated individual seller? There is a 4/2 home listed on this HUD site in very popular neighborhood that is listed at ~$95,000 and other properties LISTED in that area are in the $150,000 range. My understanding is that if no one else BIDS on these HUD homes you can sometimes have offers even LOWER than what they list the property at accepted. While this does sound too good to be true, it kind of makes sense to me when I remember that the HUD requires an OWNER OCCUPANT for these properties (most of them). So that would explain why some of these apparantly great deals are not being snatched up by investors quickly. Also, my market isnt exactly a hotbed, so this may actually be a real deal.

Obviously these HMLs are very expensive and also the ones i have seen are very short-term (1 year). If I were able to obtain ownership of one of these properties via a HML, should I anticipate trouble in refinancing with a traditional mortgage lender because of my poor credit? Or will the fact that the home is worth more than the amount of money I would need to clear the HML loan be enough compensation for my poor credit to be overlooked?

Any advice on the best way for someone in my situation to finance one of these HUD/owner occupant homes would be greatly appreciated. I am young and single, so I would be able to take on roommates to help me on the mortgage payments via rent. I am fairly certain I could find 3 people to occupy this house each paying 250$ in rent (conservative rent estimate). Just wondering if this is a good way for me to try to get into my first property.

Howdy Wheezl:

The first thing I would do is to find a good loan officer and get pre-approved for a mortgage. Your bad credit may not be all that bad. There are legitimate reasons why people have late pays and even foreclosures and even this only counts against you for a year to two when getting a new mortgage, even bankruptcy . The HML would be OK as a last resort and would give you time to repair your credit and refinance before the one year term expires. Most hard money lenders will loan 65 to 70% of the as repaired value. You may be able to find one that you could get that low. Just keep looking and making offers. You would qualify for the owner occupant property if you plan to live in it and do not own other property that could be considered your homestead.

Hope this helps a little