The Basics of Buying a Foreclosed House

buying a foreclosure
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Purchasing a foreclosure home can be a great savings to a home buyer vs. a traditional resale transaction.

However, foreclosure sales will often come with their own set of rules, regulations and red tape. Knowing how to navigate the waters for a foreclosure sale is of great benefit to home buyers.

Finding Foreclosure
Find properties that interest you. This can be done most easily by hiring a real estate agent to utilize the multiple listing service (MLS) to narrow foreclosure properties in the areas and neighborhoods most desirable to you. You will be able to preview these properties online and decide which property might be of interest.

HUD Homes
HUD homes are foreclosed properties where the previous borrower defaulted on an FHA loan. With HUD homes, buyers can expect rock bottom prices but need to be prepared to bid over the asking price. The best benefit about HUD homes is that many of them will come with a $100 down program, making them the most affordable deal on the block.

VA Foreclosures
VA foreclosures are homes that have been repossessed by the Department of Veterans Affairs from a veteran with a default on their home mortgage payments. In these scenarios veterans can sometimes receive incentives to purchase the home under a new VA loan. However, a consumer does not need to be a veteran to purchase a VA foreclosure.

Considerations
Many foreclosures have undergone damage, poor care and maintenance, and will require some work. It is very rare for anyone to find a “ready for move in” foreclosure home. Be prepared to do some major work with any foreclosure purchase.

Avoid Financing Pitfalls
Depending on the amount of damage done to a foreclosure home, all methods of financing might not be available to consumers. In some cases, homes are so badly damaged that the only way to complete a purchase is using cash.

Contract
The contract to purchase a foreclosure is identical to any other residential real estate purchase. The difference will be visible, however, in the bank required addendums that will be in addition to the purchase contract. For many foreclosures these addendums can be 10 or more pages in length.

Bottom Line
Foreclosures are a great value. The purchase process of a foreclosed home does not differ much from a typical real estate transaction other than financing concerns and additional paperwork.

Source: Shauna Zamarippa (ehow Contributor)

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2 responses to this post.

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  2. […] This post was mentioned on Twitter by Jennifer Griner. Jennifer Griner said: RT @wordpressdotcom The Basics of Buying a Foreclosed House « The Backyard Wealth Blog http://wp.me/pyWPP-jr […]

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