What you Need to Know before Buying a Foreclosed Home?
What is a Foreclosed Home
Wikipedia states a "Foreclosure is a legal process in which a lender attempts to recover the balance of a loan from a borrower, who has stopped making payments to the lender, by forcing the sale of the asset used as the collateral for the loan." https://en.wikipedia.org/wiki/Foreclosure
Because of the financial recession of 2008, more homes are on the market for sale, due to foreclosure. So, you will have a wide choice when looking to buy a home.
If you are considering looking for a foreclosed home, now is a great time to jump into the housing market. It is sad that so many people are losing their homes, but it has opened up opportunities for many to buy their first home and other new investment properties.
Foreclosed homes are just sitting waiting for someone to come and take them off the bank's hands. Some foreclosed homes need a little work and some are ready to move into. Maybe you can be a new home-owner this year.
Credit and Home Shopping
It is important to check your credit before looking for a foreclosed home. You can get a free credit report from three bureaus at http://annualcreditreport.com.
This way you will not get any surprises when you find a home you want to buy, and you will know, how much house you can afford. If there is anything questionable, challenge it or anything your need to pay off, do so.
You can still buy a house, even if your credit is not perfect. You will, however, have to pay a higher mortgage rate than if you have A-1 credit. If you are a veteran, you are guaranteed a lower rate, if you are a veteran, so don't forget to check with the Veteran's Administration for your rights.
Careful Forclosure Hunting
Before looking for a foreclosed home, keep in mind that the same companies who were giving loans to people who could not afford them before the financial crash are still out there.
They haven't learned their lesson and really don't care if they trapped you into a loan you will probably default on within a year. You will see their signs on the side of the road, usually in the middle or low-income communities. The signs will say something like, buy a new home $100 down or rent to own homes. When you see these, keep on going!
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The Right Community
When considering purchasing a home, look for a foreclosed home in a stable community. Have you ever driven past a community where you see several homes boarded up. You do not want to buy a home in that area.
When looking for a home, it is wise to look for a home in a stable neighborhood. Drive around a one or two block radius. Are there other foreclosed homes in the area? Empty homes are subject to break-ins, vandalism, and possible squatters.
Multiple 'for sale' signs in a neighborhood is indicative of a mass exodus and this not be the best place to live as the community is definitely changing and perhaps not for the better. Or the only occupied home on the block. When looking for foreclosed homes, try to find older more stable areas.
Guide to Buying a Foreclosed Homes
For Sale by Owner
Consider buying a foreclosed home from the original owner. Sometimes you may be able to get a great deal buying a home from someone of is not quite in foreclosure but is looking to get rid of the property anyway. You may be able to negotiate a real deal f they are really anxious to get out of that mortgage.
Free Foreclosure Listings
You do not have to pay for a listing of foreclosed homes. Contact HUD or go to your City Hall where you can get a free listing of the homes, and their prices. Don’t get tricked by those websites the show hundreds of beautiful home, only to find that you have to pay to get the real information.