Pros and Cons Of Foreclosure Homes

Thousands of people are finding and purchasing foreclosed homes at greatly reduced prices, when compared to what is otherwise available on the market. These homes can be found through a variety of services that provide users with foreclosure listings. These listings include important property information, as well as pictures of the homes in question.

Services that provide foreclosure listings make it possible for potential home buyers to become aware of any foreclosures in their area, and other areas that they may be interested in, all from the comfort of their own home. However, while purchasing foreclosures is commonly believed to be a good investment, many potential buyers wonder about the pros and cons of purchasing such a property.

The Advantages of Purchasing a Foreclosed Home:

There are a number of advantages to purchasing a foreclosed property. However, the main advantage of purchasing this type of property is the low price at which these properties are available. These homes are those that have been seized from a homeowner by their creditor. The creditor will then sell the property at a price that covers the remaining balance of the previous owner’s debt. This balance is generally lower than what the home is worth because the previous homeowner will have already paid the creditor some of the loan’s balance throughout their time owning the home and because the creditor will want to get rid of the home, as to avoid losing more money on the property. Therefore, future home buyers are able to purchase these homes at a lower cost and save a great deal of money.

Another advantage of purchasing a home that has been foreclosed upon, is that the seller will want to complete the process quickly, which may give the buyer more room to negotiate closing costs and other fees. Additionally, sellers must provide a complete history of the home, which buyers can use to consider the home and any repairs that must be made.

The Disadvantages of Purchasing a Foreclosed Home

Unfortunately, there are also some disadvantages to purchasing homes that have gone through foreclosure. Because the previous owners did not have enough money to pay their monthly mortgage payments, it is likely that they also could not afford any home repairs. This may mean that the home may need important maintenance or could be in poor physical condition. However, when carefully choosing foreclosed homes and browsing foreclosure listings, potential home buyers are able to purchase great properties at unbeatable prices.

NOTE: By researching and comparing the best foreclosure listings free services in the market, you will be able to determine the one that meets your specific requirements, plus the free or cheaper options including free trials.

Hector Milla runs the Free Foreclosure Listings With Pictures website, where you can see a review of the top 3 free foreclosure listing websites.

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Buying A Foreclosure

Foreclosed homes are becoming a popular choice amongst buyers and real estate investors. These properties are typically priced below market value to entice a quick sale. However, foreclosure real estate is often in need of extensive repair which can add several thousand dollars to the purchase price.

Foreclosed homes are either sold through public auction or banks. Once lenders repossess real estate the property is first listed for sale through foreclosure auctions. If the property goes unsold at auction it is returned to the lender. Banks then engage in action to remove attached creditor judgments or tax liens so the property can be sold with a clean title.

Bank owned foreclosure properties are priced higher than auction real estate, but buyers don’t have to deal with the time consuming and expensive duties associated with properties sold at auction.

Buyers who plan to purchase homes through foreclosure auctions should take time to understand the foreclosure process in the state where the property is located. In some states, foreclosed property owners have the right to purchase their house back after it has been sold through auction. This can be troublesome for buyers because they can lose money if they engage in repairs during the 30-day waiting period. It can also be troublesome for real estate investors who buy houses for use as rentals or house flipping.

Buyers who purchase foreclosure property through banks do not have to worry about the previous property owner reclaiming their house. Buyers can take possession and proceed with required repairs or immediately rent the home to tenants.

Prior to submitting purchase offers on bank foreclosures, buyers should conduct due diligence by obtaining home inspections, property appraisals, and repair cost estimates. Banks rarely accept purchase offers for less than the listing price unless extensive damage is discovered during the inspection. When unreported damage is found, buyers should take photographs and submit repair costs estimates and photos to the lender along with their proposal.

Buyers of foreclosure real estate are usually required to obtain preapproved financing in order to have their offer accepted. When buying houses through auction, buyers normally must present funds within 24 hours after their bid is accepted.

Individuals who have never purchased real estate through auctions or banks may find working with a foreclosure specialist to be helpful. Many realtors are experienced in this area and can help buyers locate the type of property they prefer and assist them throughout the purchase process.

One popular source for buying foreclosure homes and obtaining low cost financing is Fannie Mae Home Path Mortgage. This government sponsored program offers a variety of foreclosed properties across the nation. Buyers can apply for special financing options through Home Path Mortgage. Fannie Mae is working with select lenders to offer low down payment requirements, low interest home loans, and closing cost assistance. One unique feature of Fannie Mae Home Path is the option to obtain down payment assistance. While conventional lenders prohibit borrowers from obtaining down payment money from outside sources, Fannie Mae allows borrowers to receive down payment funds from family, friends, employers, and non-profit agencies.

The Department of Housing and Urban Development is another good choice for buying discounted foreclosure properties. HUD provides free housing counseling to help buyers determine how much house they can afford, as well as if they qualify for government grants or first time home buyer programs.

Buying foreclosure real estate can present risks not associated with buying houses from individual sellers. Buyers can minimize risks by working with a realtor or foreclosure specialist and by conducting due diligence. Those who take time to become educated about the process of buying distressed real estate will improve their chances of obtaining the best price and the best financing options