Foreclosures have become common in the current real estate market. It's a great way to buy a home at a discounted price.
Although homeowners in the neighborhood lose out from the low amount received from foreclosures, potential buyers on the other hand will turn around and improve the property which is a long term benefit for the neighborhood. In this article we discuss some tips you can use when buying a foreclosed home. This will especially be helpful for those buying a foreclosed property for the first time.
Here Are 5 tips To Follow When Buying A Foreclosed Property:
- Pre-approval: Obtaining a pre-approval from a reputable mortgage broker is an essential component to buying a foreclosed property. With pre-approval, the seller will get to know about you being a serious buyer and can afford to buy the property. Free pre-approvals are offered by United Home Loans. Moreover, potential buyers are provided proper guidance through the purchasing procedure.
- Complete an inspection: Investing in foreclosed property is risky and it's so important that you complete a home inspection. And don't let the cosmetics of the home fool you; there are many homes that look nice but have massive underlying problems. Doing an inspection allows you to identify any type of problem that exists in the property, which when not taken care of before the purchase will only become an expenses for you after you close the purchase.
- Not just the price tag: Homebuyers looking at foreclosed properties are usually focused on one thing; how cheap can we get this property. But there are lots of other things a buyer should consider besides the low price tag. Foreclosed properties at times require updates and additional work, thereby involving more expenses. Does the layout of the home match your needs? Is this an area you want to live in? How far is my commute? It's very important you answer these questions before making an offer.
- Homework: Doing your "homework" on foreclosed properties is crucial prior to moving forward with the purchase of a foreclosed home. For starters, check the surrounding area and make sure its the kind of neighborhood you want to buy a home in. You'll also want to make sure the improvements you are going to make match the neighborhood and that the values in the are support the improvements. Also talk with an experienced loan officer with years of experience to help you better prepare for the purchase. Have the loan officer quote you various mortgage programs so you can decide which is best for you. It's also important to stay on top of current mortgage rates so that you can lock in a low rate.
- Hire a Realtor that has experience with foreclosed properties: This might be fifth on the list but it's one of the most important aspects of buying a foreclosed property. Working with an experienced Realtor can only help you when you go to buy a foreclosed whom. Generally speaking a Realtor will have tons of information about the property and neighborhood so you can make a more informed decision. The Realtor might also have a good idea of what certain repairs will cost.
Are Mortgage Rates Higher For Foreclosed Properties?
Usually not. Conforming fixed rates for the purchase of a new home are the same no matter who is selling the property. If it's a jumbo loan you should be fine too. Where you may run into problems is if the home is completely trashed and to buy it you have to obtain a very specific rehab/construction type loan which generally carry higher mortgage rates than "regular" mortgage terms.