I currently live in DFW and am considering bailing on the metroplex in long range preparation for eventual retirement (whatever that means these days).
My plan is to obtain a HUD property for myself (got one in mind already) and bid on it during the owner occupied (OO) period and doing the necessary renovations by and for myself…meaning I will do the work myself to the degree I can and contract out what I can’t. Since I plan on this being my future home, my planned improvements will go beyond the normal things one might do on a normal quick flip. I’m aware on an OO transaction you have to actively live in the property for a year.
In furtherance of my plan, I plan to transfer with my company to the location close to this property. Not having lived there previously, if I decide I really do like the area, I will live in the HUD home permanently and sell my current home after a year or so. I’d then start buying other HUD properties in the same area under the normal investor program. If I decide the locale is not for me, then after a year, I will either sell or rent out the property and chalk it up to an interesting experience.
My current home is fully paid for and at the moment is my primary residence however as indicated if I’m successful in my OO bid I will relocate and live in the OO HUD home full time making it my primary residence. However, during the renovation period (a full gut job including the ceilings, plumbing work, etc) there’s going to be a span of time when the home will not be inhabitable.
How does it work if you can’t live in the home initially? Is there some grace period before you have to move in? Also, what makes it your “primary” residence? Is it the promise of living there full time? That’s my plan anyway so no biggie there. How does having a home already impact the purchase of a new “primary” residence through HUD?
There is no FHA-insured non-owner occupied mortgage program. The only exception, at least the last time I checked, was a provision that allowed a maximum of 85-percent Loan-to-value ONLY if the jurisdictional HUD Home Ownership Center allowed it.
(F.y.i. FHA is a part of HUD. Neither HUD nor FHA offer financing. HUD only offers mortgage insurance via FHA.)
As for your 2nd question, a “principle” residence is one in which the the mortgagor (you) lives in the property for a majority of the year (i.e., more than half the time).
First of all, you are worried over nothing. People buy and sell homes all the time and they also move from one home into another. Having your other home does not mean (in the eyes of HUD) that it is your primary residence (HUD does not; nor will they check into your previous ownership - and if by some extraordinary fluke that they sent some “man in a black overcoat” to question you, you could say that your previous home is a rental now).
Secondly, when you do in fact purchase this new OO home you will put all the utilities in your name and have the bills sent to that new address which is proof enough that you reside at your new OO home.
Thirdly, you stated that you were in fact going to get transferred there to your new location for your job. When you do move, change the address on your driver’s license to the new address. Also you can register to vote in that area (all signs and proof of residency)
If you are going to purchase this new OO home and finance it, you are better off to use the equity in your current owned home and buy the HUD OO home with those proceeds since the interest rate will be lower than HUD insured loans, there will not be any PMI (Private Mortgage Insurance) in addition to home owners insurance, which ALL HUD guaranteed loans have and is NOT TAX DEDUCTABLE. After all a loan is a loan no matter which house secures it but this way you do not have to worry about HUD at all! (Besides no men in black trench coats will be following you anyway)
Just so you know, I am a former FHA approved mortgage broker who has done several thousand FHA refinances (called streami’s; short for streamline refinances) so I do know a little how HUD and FHA work.