Buying a Foreclosure for Those Recovering from It

Seven or eight years after a foreclosure, you can get a mortgage for a home again. Although many people have just lost or are losing their homes from foreclosure, there are some people who may have recovered a foreclosure and are on the hunt for a home again. Now that they are on the other side of the fence, one way to avenge the process that took away their homes is by buying a foreclosure. If you are one of these people, this article is for you.

Buying a Foreclosed Home

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Things You Need to Know When Buying a Foreclosure

When buying a foreclosure, you need to be careful and find ways that will make your house hunting easy. Some would choose to go to public auctions but that is not really the best route to follow because these are usually controlled by the banks. Here are the things that you need to know:

1. Be careful with the current owner

If the owner is still living in the home, you can have two possible problems; evicting him and possible vandalism. It’s not easy to lose a home and most owners vent out their frustrations by destroying things in the house itself.

2. Be ready to spend extra on maintenance

Due to the possible damage that can occur in the property, you better be ready with some extra cash for repairs. Lenders who just want to dispose of the properties won’t bother to do the repairs for you so you better be prepared to do it yourself. Besides, it would be impossible for them to sell the house at a low price tag if they will still spend on repairs.

3. Beat the third party

In most cases, buyers would go through a real estate agent who specializes in foreclosures. But if there is a property that you are absolutely interested in, why not go directly to the lender after it has been foreclosed but before it is listed for sale.

4. Get prequalified

To improve your chances of getting a property, it is best to get a pre-qualification letter from a lender. The foreclosure market is often competitive and fast-changing and sellers prefer to work with buyers who have a ready financing rather than wait around for someone waiting for a loan approval.

5. Expect a low appraisal

The amount which the property is appraised is the determining factor of the size of loan that you can get. Due to the above reasons—vandalism and neglect—foreclosed properties tend to be appraised lower than properties of similar features.

These are the things you need to know when buying a foreclosure. It will make easier for you to find a good deal and better prepared for what to expect. Always try to avoid public auctions especially if you don’t know what you are doing because these are usually manipulated by the banks.

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