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Buying a foreclosed home: Don't get ripped off

Posted by  on Jun 03, 2012
 

Although there is no silver lining to home foreclosures, lenders and other entities taking title to foreclosed homes are offering home shoppers incentives including financing that can make buying a foreclosed home worthwhile. You can find foreclosed homes without paying anyone for a list of "foreclosure deals" or "how to get rich buying foreclosed homes" seminars.

  • Find HUD Homes, which are foreclosure properties with mortgages guaranteed by FHA. You'll needed to work through a licensed real estate agent to purchase a home through HUD. No down payment may be required, and teachers, first responders and nurses can get even better deals through the Good Neighbor Next Door program.
  • Find foreclosed homes through Fannie Mae and Freddie Mac: These government-sponsored enterprises, or GSEs hold large inventories of foreclosed homes and work proactively with real estate pros and approved mortgage lenders to provide good deals and special mortgages for buyers. Fannie Mae's HomePath website and Freddie Mac's HomeSteps website provide information and listings of currently available real estate owned (REO) properties.
  • Contact local real estate pros: Real estate agents and brokers in your area can show foreclosed homes on the market. Look for agents and brokers specializing in foreclosed homes. They can help with assessing property condition and help you make an offer to purchase. Real estate agencies frequently advertise listings for foreclosed homes.
  • Compare home financing options: The GSEs offer special financing incentives for those buying their properties. Low down payments and mortgage rates, seller contributions toward closing costs and waivers of mortgage insurance are examples of incentives available to buyers.
  • Read and re-read the fine print: Foreclosed homes are typically sold "as-is" and sellers assume no responsibility for problems arising after the sale. Although mortgage lenders may do what's necessary to prevent hazards and nuisances, homes may require major repairs and updating. Consider the costs of refurbishing an as-is home and have a professional home inspector assess any foreclosed home you're interested in buying. Sellers of foreclosed homes may have varying terms and conditions. Ask questions and be satisfied with all terms and conditions of a sale before making an offer. Avoid buying a foreclosed home sight unseen. Real estate agents and brokers can help you navigate specific terms and conditions associated with buying a foreclosed home.

Trust your instincts, and be honest with yourself about the cost, time and effort needed to restore a foreclosed home in poor condition. Buying a damaged home requiring major repairs can cost significantly more than your budget allows, so go in with your eyes open.

 

 

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