We’ve all hear the horror stories of buying a foreclosed home if buyers are not careful but, with a stroke of luck and the right real estate agent, buying a foreclosed home can really have many significant advantages. In the past, many foreclosed homes were abandoned and many times even destroyed. In this market, that is not the case and now that lenders are more cooperative with short sales. Currently, so many distressed homeowners are living in their foreclosed homes and taking very good care of them meanwhile, lucky home buyers are getting great homes at very attractive prices while reaping many benefits.
The first benefit of buying foreclosed homes is that it saves you money: The reason it saves you money is because you are buying a home at a bottom prices and lenders are motivated to get non performing assets off their books so they can continue lending again. Since lenders are in the lending business, they often will let the house go below market value to free up capital thus allowing home buyers to benefit. In some areas today, the home prices are the same as prices were thirty years ago so those buying now are picking up homes at extremely low prices.
Another benefit of buying foreclosed homes is that it protects you against adverse price moves because you are buying at bargain prices which could be substantially below market value. Since these home prices are so low right now many people buying homes could be richly rewarded when prices begin to rise homes will be will be worth much more money.
It seems that many people buying foreclosed homes right are walking in to instant equity. Since home buyers are buying their homes below the market, many are finding their homes appraising out much higher then what they paid for them.
If buying on FHA, you can often get the upfront mortgage insurance premium refunded wipe out your PMI (private mortgage insurance) on your mortgage by refinancing to a conventional loan. By having the home reappraised, many buyers who purchased their homes on FHA loans can switch to a conventional mortgage with the new appraised value. Conventional lenders do not require PMI when the equity is 20% or more. By simply getting rid of them upfront mortgage insurance and PMI you can save you thousands of dollars throughout the life of the loan.
Those buying foreclosed homes right now, can take advantage of the near record low interest rates and have the ability to lock in at an incredible interest rate. Once you get an approved contract on a foreclosed home, you can lock in your mortgage rate and take advantage of the low rates that being offered right now and get your home for a record low prices.
In addition to buying your home at extremely low prices and taking advantage of low rates, payments are often less then or the same as renting. In some instances you might even pay less in your mortgage payment than what you would pay in rent. With the mortgage interest income tax deductions you are able to deduct the interest and taxes paid on your home and can literally save thousands of dollars in taxes while you own your own home.
In closing, there are clearly many advantages of buying foreclosed homes. Many homes are like new or in great condition. Those buying right now are getting rewarded with low prices and low mortgage rates and will begin building equity right away in addition to saving tons of money on their income taxes.
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