Despite the Government’s best efforts and greatest intentions the wave of foreclosures continues to increase. The borrowers that are now defaulting on their mortgages and not qualifying for loan modifications are no longer people with subprime loans and bad credit rating. The fastest growing demographic in foreclosures are prime borrowers with prime loans that have lost their jobs and cannot afford any kind of deal on their mortgage.
This is a tragedy for the millions of families that face losing their homes. However there is a flip side to the crisis in the housing market. The flip side is that the foreclosure market is doing great. More and more buyers with cash in their pockets are looking for bargains among the millions of homes that are going through a foreclosure.
Many have the idea that the only homes that are on the foreclosure market are located in crime-ridden areas and are run down shacks. This is simply not true, during economic crisis like the one we are now going through all kinds of homes can be found, from beachfront luxury homes to shacks in the ghetto.
There is another myth a serious buyer must forget about as soon as possible. You are not going to find a great property selling at pennies on the dollar. Sometimes you can find amazing deals but this is probably because there are other circumstances that reduce the value of the home besides being on the foreclosure market.
However, you can get some great deals and discounts. A typical discount is probably around 5% less than the market value, although you can sometimes pay up to 30% or 40% less.
If you are savvy enough, this could only be the beginning of your savings. If you buy the property from the lender you could ask/demand for some of the buying costs to be waivered. If you ask nicely you might even get a discount on the interest rate or a break on the down payment.
Buying a home, whether on the foreclosure market or not, is a huge investment for most of us. It is therefore worth us spending some time doing our research and due diligence before we spend tens or even hundreds of thousands of dollars.
The foreclosure ball begins to roll when a borrowers falls behind on mortgage payments. A homeowner that loves his home will try his best to keep his home, making some payments, looking for a loan modification, or any other measure he can. However, if the home still forecloses the chances are that maintenance has not been carried out for some time on the home. Include the costs of bring maintenance up-to-date in your investment research.
What this might include will depend on the property. Some just need some gentle manicuring, while others have underlying structural damage that is prohibitively expensive to fix. It is true that homes in need of some tender lover and care will come at a discount, but it is important to make sure you can afford the cost of providing it.
Related posts:
Our sponsors have a proven record of integrity and fair deals.
Thanks for visiting us!
When buying a home, use the tools at your disposal to compare costs and terms and negotiate for the best deal. Your local newspaper and the Internet are good places to start shopping for a loan. You can usually find information both on interest rates and on points for several lenders. Since rates and points can change daily, you’ll want to check your sources often when shopping for a home loan. Knowing your current Credit Standing helps.
Home loans are available from several types of lenders such as commercial banks, mortgage companies, and credit unions. The rates quoted by any given institution will vary, so you should contact several lenders to make sure you’re getting a fair rate. Home loans are also available through mortgage brokers. Brokers arrange transactions rather than lending money directly; in other words, they find a lender for you.
Before you start talking to lenders, determine the amount of a down payment you can comfortably afford, and then make sure to find out all the costs involved in the loan. Knowing just the amount of the monthly payment or the interest rate is not enough. When talking to different lenders, make sure you keep the loan amount and down payment constant, this way you can more properly compare the competitors.
Once you know what the options available to you are, negotiate for the best deal that you can. Lenders and brokers can and may offer different prices for the same loan terms to different consumers, even if their loan qualifications are exactly the same. Additionally, there’s no harm in asking lenders or brokers if they can give better terms than the original ones they quoted or than those you have found elsewhere.
Here’s one approach; Ask the lender or broker write down all the costs associated with the loan, after its on paper see if the lender or broker will waive or reduce some of the fees or agree to a lower rate or fewer points. By having all the costs written down, you can make sure that the lender or broker is not agreeing to lower one item while raising another to make up the difference.
Don’t assume that minor credit problems or difficulties stemming from unique circumstances, such as illness or temporary loss of income, will limit your loan choices to only high-cost lenders.
