If you’re looking for an affordable property to buy, you can take a look at pre-foreclosure homes for sale. To many, buying a pre-foreclosure property is a pretty good deal.
However, a buyer must look at both the potential benefits and pitfalls of purchasing this property before inking on the dotted lines.
What is a pre-foreclosure?
In the foreclosure process, the borrower on default is granted a grace period known as “pre-foreclosure.”
During this period, the borrower is given the chance to make up for the defaulted mortgage payments. A lender reinstates the loan and the homeowner will be able to keep the home if he/she successfully repays the total delinquent amount.
If the homeowner can no longer keep up with the delinquent payments, he/she may sell the house. This is done in the attempt of avoiding having a foreclosure on the owner’s credit report. Selling allows him/her to pay off the loan before it’s foreclosed.
An interested buyer can also purchase a pre-foreclosure home during a public auction once the pre-foreclosure period is over.
Is Buying a Pre-Foreclosure Home a Great Idea?
To many buyers, a pre-foreclosure home is a steal of a deal. It can mean great bargains for the person who will purchase the property.
Do the math and find out the breakeven figures. You can use this number when negotiating with the owner.
Once you have this information ready, contact the homeowner and show your interest in the property. At this stage, the homeowner is usually in distress. They’re figuring out how they can sell the home with a minimal loss. Use this to your advantage by giving them an offer they can’t say no to.
However, always be cautious because not all pre-foreclosure properties are actually for sale. Make sure you do your homework by checking on the property’s public records. This is how you’ll find out how much the remaining loan balance is and if there are existing liens associated with the house. You want to be clear from any with which the owner must pay before you buy the property.
After the negotiations, make you put all agreement into writing. Ask help from a lawyer or a real estate agent to help you draft a purchase agreement.
Looking for the perfect home to buy is not an easy task. It is always a good practice to look for properties in different markets. You can get in touch with a real estate agent near you. They are experts in the local real estate scene. They will be able to lead you good bargains that will not leave you shortchanged on your money.
Moreover, a trusted lender can also help you on finding leads to a reasonably priced home. They’re also the perfect people to discuss on how you can finance a home purchase. Aside from funding a mortgage, they also know some key people who can help you in your house hunting journey.
Whichever property you decide to buy, always make sure that you are on the safe side. Make sure that you can afford to pay your mortgage consistently. Talk to a lender about how you can make this possible.