If you are looking to buy a home but are worried that you can't afford monthly payments, why not consider a foreclosure as your first home?
A foreclosed home is usually owned by a bank or lender and sold at prices way below its market value. Who knows, you may just hit the jackpot by purchasing a residence that would have been out of your price range.
We share the top reasons you should consider foreclosed properties as a first-time buyer.
How Buying a Foreclosure Works
A foreclosure happens when a borrower fails to pay their monthly payments. The lender then exercises his right to seize the property and resell it to recover or reduce its financial losses.
Foreclosed properties are usually put up for auction, which means that lenders sell the home below the market value.
The process of buying a foreclosed home isn't too different from the traditional way of buying a home. However, having an experienced real estate agent by your side is a good idea so that you'll understand what you are getting into.
Advantages of Buying a Foreclosure as Your First Home
Get a Good Deal
Foreclosed homes are generally priced below market value for a quick sale, making it possible to purchase a property or in an area that might have otherwise been out of reach.
Purchasing a distressed property can be a lucrative investment if you plan to resell in the future.
Build Equity Quickly
Purchasing a foreclosed property gives you the ability to improve the property's condition and build equity fairly quickly as a result. Since the previous homeowner failed to make mortgage payments, it's safe to assume that they had no money for repairs and upkeep.
As a buyer, this allows you to make value-adding improvements.
Less Competition In Certain Instances
In some ways, first-time buyers may find less competition with foreclosures. This is because most first-time home buyers prefer move-in-ready homes. Keep in mind that investors are also keen on foreclosed homes, so you'll still want to be ready with your pre-approval letter to put in that offer fast.
Legitimate Purchasing Process
If you buy the foreclosed property from banks and mortgage lenders, you are assured that the transactions are clean. Banks provide transparency and accountability regarding the condition and legal documents of the property.
Where to Find Foreclosed Homes
The U.S. Department of Housing and Urban Development is a good resource for foreclosures available for purchase.
Bank websites show lists of foreclosed properties for sale
Multiple listing services can be accessed by licensed real estate agents in your area.
Online real estate marketplaces like Zillow have listings of foreclosed properties though they may not have the most up-to-date information.
If you have decided you would like to learn more about buying a foreclosed home, we can help you with the process. Give us a call or send us a message on our website to learn more.