What are Foreclosed Homes?
Are you going to be a first time homeowner soon? You may have many questions on a lot of real estate jargon. As you go about looking through houses you may notice some foreclosed homes. You may wonder, “What is a foreclosed home?” Well to put it simply, a foreclosed home is when the owner is no longer able to pay their mortgage loan payment, which then the home is repossessed by the bank. This may sound too good to be true, but there are pros and cons to every decision you make.
Reasons to buy a foreclosed home:
A great reason to go with a bank owned home is because they are motivated sellers. The banks are just trying to get their money back somehow, so they want to sell the home as soon as possible. Much of the time you buy the home below its’ market value. The average rate is 28 percent less than what it is worth. Buying a foreclosed home could definitely be a great opportunity in the long run to invest your money.
Most likely you are going to buy a foreclosed home under market value. Since this is the case, that means you will not have to borrow as much from the lender. You will still be making a mortgage payment, but it won’t be as much as if you were paying “full price” for the home.
Cons to buying a foreclosed home:
Buying a foreclosed home sounds too good to be true, but there are some disadvantages. When you buy a foreclosed home, it comes as-is. This means that if anything is wrong with the home you most likely won’t know until after you have moved in. The home was lived in prior and could have been sitting vacant for a while, so there is not maintenance being done on the home to maintain it. Also if there is damage to the home and if it can’t pass inspection, then you possibly cannot get a mortgage loan and you would have to pay cash or get a conventional short term loan.
Then since the previous home owners could not afford to make their mortgage payment, which means there are other bills they might not have paid. Some of those bills could include: loans against the home, property taxes and contractor. If the previous home owner did not pay any of these, once you purchase this home all of the previous unpaid bills are your responsibility. Any foreclosed home that you buy, make sure to do a title search, this will insure that there are not any liens on the home.
There are pros in cons in everything that we do and buying a foreclosed home is one of them. Just make sure you are prepared both physically and financially, because your home may need a little of TLC put into it. Given everything it may be financially beneficial and you may get your dream home at a great price!
The Avery Roberts Team of Monroe, LA has all foreclosed listings in this area! Just follow the link to view our entire catalogue of foreclosed homes: Foreclosed Homes