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Buying a Property in Foreclosure



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By : Sonia Smith    99 or more times read
When purchasing a foreclosed home, it is important to ascertain the kind of home you wish to buy. With a high foreclosure rate throughout the country, homebuyers feel that they have fallen into an enticing deal.

Whether you should purchase a home in foreclosure depends on several aspects, including your homeownership experience, your financial standing and access to professionals who are experts in purchasing foreclosed homes. Bear in mind that although foreclosure buying saves you thousand, it also means a greater risk on your investment. Before buying, it is of vital importance to consider several things.

Take into consideration that a foreclosed property requires more maintenance and major repairs. These homes are often neglected, left vacant for quite a time and in a serious case of disorder. It helps to find out the actual cost of home ownership and establish a relationship with contractors or other professionals to help you.

You must have a capable assistance from a real estate agent, lawyer, investor and other professionals who are familiar with the real estate market. The said person should have ample association with an appraiser, a home inspector or even a general contractor.

Establish if the home in foreclosure will become your main home or an investment property. If you plan to use it as a rental property, consider the expenses on upgrades and repairs. See to it that you can rent out the property and you would be able to profit from it for several years.

Normally, you will not be able to inspect a foreclosed property lest you have checked it out during the pre-foreclosures stage. You have to settle on the information given by the seller about the true condition of the property and you will have no time to compare homes and do a search of the title. Most likely, the home has been vacated for months at the time of the foreclosure. It is not surprising to find dirt, missing toilets, appliances, sinks, electrical wiring, plumbing and weather-associated deterioration.

You can buy a foreclosed home for as low as 30 to 40 percent below the rates in the market and most foreclosed homes can be bought at five percent below the market. If you purchase from a lender who holds the default of the mortgage, you will be able to save more and the lender may offer to waive on costs of closing and give you a break on the down payment or the interest rate.

Some foreclosed homes are new but they are hard to find and seldom appears on the national lists. The slow economy in some states left most builders at the end of their construction-loan and unable to find a buyer for the homes. At this time, the bank who issued the loans will take over the properties and will try to sell with the help of a real estate agent.

A foreclosed home may prove to be a good real estate investment especially if you are able to purchase on a good neighborhood. The appreciation of the home is tax-free until the property is sold. With so many down stock cases, a foreclosure investment could be the best option for you.
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