Due to the current state of the economy, more and more homes are being foreclosed. This most commonly occurs when a homeowner is unable to make his or her mortgage payments. At this point, the lender of the loan will take the legal steps and put the home under foreclosure. If the homeowner cannot make the missed payments, then the home will be sold to the bank and put up for auction. These homes are often sold at relatively low prices, making them seem to be a good investment. Though it may be tempting to buy a foreclosed home, there are many things to take into consideration before doing so.
The decision to buy
Foreclosed homes may be cheaper than buying a home the more conventional route. However, that doesn't mean that you should go out and buy one without giving it some serious consideration. A foreclosed home will still be a large amount of money. On top of that, for the most part, foreclosed homes aren't fixed up before being put up for auction. This means that they will be sold "as is," meaning they might not be up to code and could have several other problems. Thus, considering all the repairs you may have to make to a foreclosed home, buying one could end up costing you more money.
If you still are interested in buying a foreclosed home, you should consider your previous home-buying experience. If you are looking to buy your first home, a foreclosed one might not be the most ideal situation. Since there are a lot of legal issues involved (you'll have to deal with the bank, the previous homeowner's lenders, etc.), people that have owned homes before may have an easier time buying a foreclosed home.
Whatever the case may be, you'll want to make sure that your financial situation allows you to buy a home. Again, when you buy a foreclosed home, you will probably need to spend a considerable amount of money fixing it up. Therefore, you should be totally sure you can afford to make the investment before buying a foreclosed home. The last thing you want to happen is for you to lose the home and have it foreclosed yet again.
The buying process
Buying any home can be a long and complicated process; buying a foreclosed home can be even more difficult. The first step, though, is to find a foreclosed home you'd like to buy. Of course, the individual requirements of the home you're looking for will depend on whether you want to live in the home or just fix it up and resell it. Either way, you can find foreclosed homes in any of the following ways:
- Contact a real estate agent specializing in foreclosures
- Look at real estate listings in newspapers
- Perform online searches for foreclosed homes in your desired neighborhood
- Search the U.S. Department of Housing and Urban Development's website for foreclosure listings
- Drive around your neighborhood, and you might see signs designating some houses as foreclosures
TIP: Each state has its own rules and procedures for buying foreclosed homes. You can learn the rules of the state you'd like to buy a foreclosure in by going to this http://www.bargain.com/.
No matter which method you choose to find a foreclosed home, you will likely need to hire a real estate agent to help you with the home-buying process. You might not be able to purchase a foreclosed home without one. At the same time, if you work with a real estate agent experienced in foreclosures, he or she can help with all of the paperwork and help ensure you get the best bargain possible. By working with an agent, he or she may also show you foreclosed homes that haven't been listed yet.
Once you have found a real estate agent and a home you would like to purchase, you'll be ready to take the next steps toward owning the home. These can include getting preapproved for a mortgage, finding out if the home has any liens on it, and, finally, making an offer. If your offer gets accepted, there will still be a couple things left to do. For one, you'll have to have the home inspected. Afterwards, you are likely to have a lot of paperwork to go through before the home is officially yours.
Buying a foreclosed home certainly can present some difficulties. However, if you want to buy a relatively inexpensive home and don't mind putting the time and money into fixing it up, purchasing a foreclosure can be a good idea. Whether you wish to just fix it up and resell it or make it your permanent home, foreclosures are a great opportunity to buy a less expensive house.
Photo by: Stuart Miles (Freedigitalphotos.net)