Foreclosures are quite attractive for buyers who want to become homeowners and are keen on purchasing homes that are sold for less than their market value. There are instances where homeowners in default on their mortgage opt to offer their property for a short sale. On the other hand, there are buyers who are particularly looking for short sales. This is an ideal situation for buyers and sellers as well as the mortgage lenders, where everyone stands to profit in some way or another.
Being Prepared for Foreclosures
But buying foreclosures is not for the weak of heart. To many, these transactions can be quite complicated and convoluted. For sure, one cannot just take a plunge and purchase a foreclosure without learning a few things about the industry and the particular foreclosed property being offered to them. For starters, acquiring foreclosed homes involves a contract of sale so that buyers would need the help of a lawyer with some experience on foreclosure laws.
Anyone looking to buy a property know that they have to be financially prepared, especially if they do not intend to pay cash for their purchase. A good financial situation in order to take out a home loan is a high credit score and a stable source of income. Buyers should submit records of their personal finances, including tax returns, pay slips, bank deposits and other assets for assessment to banks. Banks will make the determination of whether the buyer can afford to apply for a home loan.
Not a lot of lenders will allow buyers to assume the existing obligation that the former homeowner defaulted on. So buyers should be prepared to not only absorb the unpaid portion of the home loan, but all the penalties and taxes that have been imposed due to the default. However, with the state of the foreclosures market these days, foreclosed homes still come out significantly cheaper than brand new ones despite all the fees and charges that sellers may impose. Depending on the information that they are holding, buyers can even bring the asking price for a foreclosed home even lower.