Buying The Right Kind Of Foreclosure Home
Posted on March 7, 2009
Filed Under Buy preforeclosure |
The market for foreclosed homes has become immensely popular in recent times. You see people on TV, buying foreclosures and flipping homes and sometimes you might wonder if buying into the foreclosures market is right for you. A lot of people are now trying to get into this business because foreclosed homes are seen as a very good and affordable way of buying homes. Those who have not tried it may want to at least take a look. However, you need to know the different types of foreclosures and which ones would be right for the beginner and the first time investor.
In order to find the correct information, you must delve into it a little and see if it suits you. It is not as if there are no cons, no negatives, in the business. Like everything else in life, there are disadvantages you must look at. Most people, however, agree that the advantages in the foreclosure homes market outweigh the disadvantages. Pre-foreclosures are not really easy to find, but the ultimate rewards can be great. A pre-foreclosure is a home that is in the beginning of the foreclosure process or about to be foreclosed on.
There may be many reasons for foreclosure, like divorce or death in the family, the loss of a job or the sudden inability to go to work or any one of many such hardships. Most people in a pre-foreclosure want to save credit ratings and are willing to sell their homes fast and cheap. You can simply buy a list of homes in pre-foreclosure stage and then send out letters stating your interest in buying the home. Remember that these people are desperate to sell their homes and hopefully get something out of the deal. They are about to lose their homes and have to move, so do not take advantage of these people. Try your best to work out a deal that is good for both parties. Foreclosure properties can be bought at courthouse step auctions as well. But these are extremely difficult and best left to the professional real estate investors. Although an investor can often make substantial amounts of money with courthouse step auction foreclosures, the risks are equally high and it is not recommended for beginner foreclosure investors.
The main disadvantage of foreclosed or foreclosure-homes, is that they may need a fair amount of work done on them, before you can move in or flip the house. People who are in financial difficulty usually own foreclosed houses. This usually means that maintenance and upkeep might have suffered as well. Foreclosure homes generally need some repairs, a layer of new paint and some new carpets at the very least, to turn them into inhabitable and attractive residences or resalable investment properties. REO homes are great for beginning real estate investors and first time homebuyers who do not wish to invest a lot of time and money in repairs.
An REO is a home one that has already been foreclosed. The home did not sell at the courthouse step auction, so the lender asked a realtor to sell the home. These homes are then sold at five to ten percent below retail and make excellent first time real estate investments or homes. Getting a home inspection before making an offer will lower the risks of landing a really badly run down property.
Kris Koonar
http://www.articlesbase.com/non-fiction-articles/buying-the-right-kind-of-foreclosure-home-135223.html
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16 Responses to “Buying The Right Kind Of Foreclosure Home”
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I have a serious question about buying a home
My husband and I are looking to buy our first home. We looked at a foreclosure that is $50,000 (we live in central wisconsin). It has a nice 2 car garage, new roof, new siding, new windows, and is structurally good. It needs a lot of work on the inside though as far as updating. It needs new carpet and flooring, the hardwood floors need to be refinished and EVERYTHING needs to be repainted. And extra here and there kind of stuff as well needs to be done. My question is about your first home and your experiences with finances and updating…thanks so much!
Vote for Obama
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My fiance and I just bought a foreclosure as well that needs a lot of work. The upstairs has all new windows, and the whole outside has new siding, but everything else needs to be remodeled. Buying a foreclosure is a great idea bc then ur payments are lower than buying a new house. My fiance and I figured it doesnt matter about the updating because we plan on being here for several years and have plenty of time to do it.
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Why are you looking at a foreclosure??? That is somebody elses home!!
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make sure you get a fixed rate mortgage no matter what the bank tells you! You don’t want to end up losing your house!!!!
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this will help you decide
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http://www.hud.gov/offices/hsg/sfh/buying/buyhm.cfm
That sounds liek A LOT of work, i think you should streatch ur budget if u have to, but get a house that doesnt have too much work to be done to it!
Foreclosures arent the best choice because they dont have alot of work done to it, and there might hav not people lived in it for a while.
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Wow, $50,000 for a home. That sounds so cheap. Anyway, with such a low price, you simply obtain a loan in excess of $50,000, say $75,000, and use the extra money to fix it up.
That’s what we did pretty much. Except we got a loan in excess of the sales price of our home to pay off other debt.
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You have no idea you’re born!
The average house in Britain costs £170,000 ($340,000).
$50,000 (£25,000) in the UK would buy a nice car.
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I have bought and sold many homes… moved in and fixed them up.
This is the time to buy that is for sure. It sounds like the major ticket items have been taken care of. When you move into most any home you will probably do some painting.. that isnt an issue. Carpet isnt that expensive.. and refinishing the floors (if not a must) can wait if you dont have the money. just buy a large area rug.
50,000 for a house…. that is the cost of a nice care… so look at how much time you will have to do the work and go from there…
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Our house is on the market and we are looking for a new home. I think that $50,000 is a great bargain if you’re willing to put in the sweat equity! Good Luck.
Electrical, plumbing, flooding……all of that is is good, right?
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What you’re talking about is often called “sweat equity” and it’s a fantastic idea if you’re young and in good shape and can do some of the work yourself. Painting is just time consuming so you guys should be able to do that yourselves. Pay someone to do the hardwood floors though. You can mess them up and cost yourself a lot more money to have your mistake fixed if you don’t know what you’re doing.
Definitely get a fixed rate mortgage and be careful about borrowing more than you need (and NEVER borrow more than your home is worth). I’d ask your realtor what improvements will help increase the value of your home and make sure you do those first. Paint is cosmetic and won’t increase the value but the hardwood floors could raise the value of your home by several thousand dollars and will help build equity.
Discuss how long you think you’ll live in the home and how much money you want to spend before you sell.
Good luck!
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We bought our first home about five years ago, and it was so much simpler than I thought it would be. First, we obtained pre-qualification from a mortgage company. That was to find out how much money we could borrow based on our income, assets, and debts. When we found the house we wanted to buy, we put in our offer through to realtor, but you will probably skip that if it’s a foreclosure. They had us fill out paperwork, like the application, consent to obtain credit reports, etc. We had to provide paycheck stubs and bank statements, from, I think, seven months. I had one thing on my credit come back questionable, so I had to write a letter stating why it was on there. (Turned out it was a mistake.) If you go the route of a FHA loan, you have to have an inspection, but the mortgage company or the realtor set that up, and an appraisal. They took care of that, too. After the date was set to close, we just waited and packed. It was really easy. We did remove the carpet, put in hardwood flooring, remodeled the bathroom and painted. The cosmetic stuff is secondary to making sure the electric, plumbing, and serious stuff was in good condition. We had the sellers buy a warranty on the home. I think that’s a requirement for FHA. Good luck! I hope you get the house you want! Just work with your realtor and/or the mortgage company and all should run smooth!
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1st get your self a home inspection done by a cert home inspecter. looks can be deceiveing. also ask about closing cost on who pays it. and also pti point taxes and interist. also is it in what is called a home buyers location which do u ahve to get permission frrom the homeer oss. to do anything on the oustide. there is alot u ned to know
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O.K i think if you are really occupied with your career(s) and wont have time to spend renovating then i would keep looking that is one thing you really have to think about but, I’m not sure about the money, that’s one thing you have to decide. Think do i have the time and money to put into this house? Are there things i am willing to cut back on to get money when i need it? It’s up to you it seems like a nice house, also will you and your husband have the skills to paint and do other work on the house. I hope this helps
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No matter what you found in the inspection, something is going to break not long after you buy…and then something else…and so on and so on.
Everything costs more and requires more time than you anticipated. Pretty soon you accept just doing what you absolutely must (i.e. cleaning the gutters can’t be ignored) vs. things you wish were done (i.e. I wanted to re-landscape the whole yard this year, but ran out of time.)
There’s a reason your dad always threw a fit when someone turned the AC down to 65. You can live between 76-80 when it’s your money paying the bills!
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