So you’ve finally decided on buying your dream home, but have a small budget. You can still buy your dream home by buying a foreclosed home. Foreclosure is the legal process of recovering the loan balance from a borrower who has stopped making payments.
How to buy a foreclosed home?
If you’ve decided on buying a particular foreclosed property, speak to the owner and negotiate a deal with him. You can buy the property for a good price as the owner of the property will be looking to pay off his loan amount.
You can also buy a foreclosed property from the lending agency who has taken over the property after a particular grace period. Banks auction off foreclosed properties in quick time.
Do your homework before buying a property
Like most important purchases, you should do a thorough research on the property. Understand how the entire foreclosure process works, and also attend a few foreclosure auctions to get a hang of the process. Learn about the market value of the property and also about the history of the property.
– Foreclosed homes come with a huge discount and you can buy a foreclosed home for around 25% lesser than the market value.
– Since there are numerous projects coming up, the prices of homes that are foreclosed have decreased even more.
– As the home is already built, you can move in immediately.
– You can confidently buy these homes without worrying about the legality of any of the documents as they would have been checked by the bank.
– Most foreclosed homes are quality homes in good residential areas.
– As you are buying a home from a government recognized financial institution or a bank, the seller can be trusted.
– You can complete the entire transaction in less than two months.
– You do not get any warranty on foreclosed homes.
– As you are buying the property as-is, there may be many repairs and modifications that you may have to make. The previous owner may not have had money to pay his loan payments on time, so he may not have had any money to pay for repairs, either.
– The bank will also not give away any history of the property or the condition of the house.
– The previous owner may have had other debts like property tax or maintenance charge, which you may have to pay if you want buy the foreclosed home.
– Calculating the value of a foreclosed home can be a hard task.
– You may also have to pay utility bills like electricity bills and water bills.
– Banks may not offer you a loan for a home that is foreclosed as there may be legal problems in the property.
– You may have to pay the purchase price of the property only by cash. This can be an issue if you cannot get a loan from a bank.