Buying a foreclosed home could be a great deal, according to USA Today. However, keep in mind more than just the price of the home when considering this route. Very often, the foreclosed home will need extensive repairs, which is not only expensive, it is inconvenient. You need to be willing to live in the home during repairs or have another place to stay.
Know your credit score. After the subprime meltdown occurred in 2008, it became harder for borrowers to get a mortgage. To increase the chances of your being approved for a mortgage on a foreclosed home, you should have a good credit score. If not, you can take steps to improve your score and try to apply after your score has improved. If your credit score is good, you should qualify for a fixed-rate loan with a low interest rate.
Have cash. Having enough cash for a large down payment will help you to buy a foreclosed home.
Beware of auctions. While you can get a good deal at an auction, they typically are risky investments, according to USA Today. With most auctions, the buyer does not get to check out the property first and must have cash on the spot to buy the home. You may also have to deal with an eviction buying a house this way.
Make an offer to the bank that owns the property. You may not get the house this way, but you might. You just have to wait for the bank’s response. While you are waiting, however, you can check out the house to see what kinds of repairs it needs.
Pay a fee to find pre-foreclosures. You can find homes this way at places such as foreclosure.com, foreclosures.com and realtytrac.com. Offer a price to the owner that is less than what the home is worth but more than what is owed on the house.
Consider purchasing a home in an undesirable area. More homes are usually available in unpopular areas. Therefore, it may be easier to obtain a home where there are a lot of homes and not many buyers.
Check out HUD homes. The U.S. Department of Housing and Urban Development sells homes at reduced prices to police officers, teachers, firefighters and emergency medical technicians. Look into their Good Neighbor Next Door program for more information. In addition, many HUD homes qualify for FHA-insured loans through the Federal Housing Administration.