What to Expect When Buying a Foreclosed Home
Buying a home can be a tough process no matter what the circumstances are. It can be difficult getting a mortgage or finding the right neighborhood or home. Looking for bargains while house hunting is also not that easy. One way to find a home at a bargain price is to purchase property that’s been in foreclosure. The homeowner who’s defaulting on a mortgage and the lender are often very anxious to put an end to their dilemma and buyers can often find a price that’s below the market value of the home.
But purchasing a home that’s been in foreclosure is not without its downside. At Cliffco Mortgage Bankers we know our way around mortgages and we want to help the home buyers who are our customers find the deals and loans that are right for them. So we want you to know about the pros and cons of buying a home that’s under a foreclosure.
Advantages of Buying a Home Under Foreclosure
Among the arguments in favor of buying a home that’s been in a foreclosure are that the purchase can give a potential buyer an upgrade, according to Quicken Loans. It gives them a chance to potentially buy a larger property for a price that’s below the market rate.
HGTV also lists several advantages to buying a home that’s in various stages of the foreclosure process. They maintain that if the seller has missed payments, or has received a notice of default, they will be more motivated to unload the home quickly and might be more amenable to making concessions on closing costs and other concessions. If the home is actually subject to a foreclosure auction, there’s a good chance that the sales price will be low and the requirement of a cash payment will reduce potential competition.
The Downside of Foreclosure Buying
There are definite disadvantages to purchasing a home under foreclosure, and buyers need to stay on top of these issues. One big one, according to HomeFinder, is that the seller may not have maintained the property well. Their lack of financial resources combined with the increased likelihood that they would be putting money into a home they might lose means that there’s a good chance the homeowner will let repairs go. It’s extremely important that you don’t skip the home inspection if you’re the buyer. You should also look out for structural damage, mold, broken pipes and other problems that may need to be repaired.
Another thing to keep an eye on are any debts related to the foreclosure that you might inherit. The seller may pass on tax obligations, home equity lines of credit or construction loan obligations, according to HomeFinder. You can also expect a longer sale process. If your purchase is a short sale, there could be several parties involved in the transaction. Foreclosures usually involve extra paperwork, plus lag time. And there’s no guarantee you’ll get the property. Even if you’re working with a seller who’s missed a payment, you may encounter a seller who can’t negotiate a price below the outstanding mortgage balance.
Cliffco Can Help You Find a Home Loan That’s Right for You
Buying a home under foreclosure can be a bargain for potential buyers, but they need to go into the transaction with their eyes wide open. If you’re looking for a mortgage to buy a home that’s under foreclosure, Cliffco Mortgage Bankers can help explain your options and help you find a home loan that’s right for you. Contact us today.