Whether it is for renting or simply you want your own home, buying a Foreclosed house can be a great way for you to own a house. Foreclosure is a legal procedure that allows people to buy home at a price that is less than the actual market value.
It is important to note that buying foreclosed homes is not for the faint hearted as it can be a long and tiresome procedure and there are certain risks involved in the procedure. You will have to be prepared before you decide to buy a foreclosed home. Foreclosures come by as a result of the homeowners not being able to pay off the mortgage. Rarely do people voluntarily choose to foreclose their homes. So before you can decide to go in to foreclosure you have to be ready emotionally, as you will meet distressed homeowners.
Terms Used In Foreclosure
There are three specific terms that you will have to know about before you proceed to buying a foreclosed house. The terms will enable you to know if you can buy the house with no money down.
The first term that you may come across is Insured (IN); this means that the home listed as foreclosed meets the minimum property standards. Insured foreclosures are usually not bought with ‘no money down’ first. You can however still purchase the home with no cash by following these steps; Place a bid through the Federal Housing Administration (FHA) 203b. Inspect the house yourself by hiring a home inspector who knows your interests. Include any fault you find on the house in your bid, and then send.
The other term that you will come across is the Insured with Escrow (IE), this is basically a term that refers to a foreclosed home that needs repairs to meet the minimum standards. These homes are still the same as the Insured ones, as the home cannot be bought with ‘no cash down’ but you can still buy the house by following the steps listed above.
Uninsured is the other term. This is a term that is used to refer to foreclosed homes that require repairs. The house can be bought with low money down.
Different Methods Of Buying A Foreclosed Home
There are different channels that you can use to buy a foreclosed home. You can purchase the home from the home owner before the house is listed for foreclosure. One thing that you have to know is that you will need to have cash before you can negotiate with them. Most of the homeowners prefer people with cash at hand to people who have applied for loans. You can purchase the homes from an auction, which is a very common practice. The homes, after they have been listed for foreclosure in the public auction, are then announced by the county or the local court, as to where the property is located. One problem with buying the house through an auction is that you will not be able to know the condition of the home before you purchase it. This may force you to pay more money for the repairs of the house. The other method and the most preferred one is purchasing the property via the bank. The bank usually uses a real estate agent who specializes in foreclosures.
Important Things To Consider
There are quite a number of factors that you will have to consider before you decide to buy the foreclosed home. You will need to consider if you have the money to do the repairs needed in the house. Yes, you may get the house with no cash down but the money needed for the repairs may be unrealistic. You should know that the bank might not give you the house if you have not made the repairs on the house. The other factor that you need to keep in mind is that you may be required to force the home owners from their house. If you know that you are not able to do that, then you should buy the house from the bank as it is the bank that does the eviction. You will have to do your own research about the history of the home. There are some states that require the seller to produce a Sellers Property Disclosure Statement (SPDS).
Steps Of Buying A Foreclosed Home With No Money
If you don’t have money you can still buy a foreclosed house. You will first have to decide the form of purchase method you want to use. It is advisable for you to use the bank as the process is secure and less stressful. Once you choose the method, you may find a real estate agent who specializes in foreclosed homes. This will give you an advantage over your competitors. This is because most of these real estate agents usually know of the properties that will be foreclosed before they are listed. Next step will be to look for homes that are being foreclosed. Assess the state of the house to see if it needs repairs. As mentioned above, look for the history of the house. It is good to consult a realtor before you buy the home.