If you’ve never bought a foreclosure property before, this article provides you with the steps you need to buy a foreclosed home.
The current market has numerous foreclosed houses; it’s an excellent opportunity for first-time homebuyers and investors alike to get a good deal on a real estate investment. When the mortgage rates are low, it’s an even better time to purchase property and depending on the real estate market that you desire to buy property in; you may get just the deal you are looking for.
Real Estate Investment
To acquire a foreclosed property, you will need an experienced and licensed real estate broker or agent, earnest money, proof of funds or a pre-approval letter and down payment, if required. However, according to the article, “The Safest Ways to Buy Foreclosures,” posted by Bankrate.com at the MSN Money website, many banks will loan you the total price of a foreclosure property if you have good credit. In addition, the earnest money that’s required represents your good faith or sincerity in purchasing the property, and a pre-approval letter for a mortgage loan will typically suffice as proof that you are qualified to buy the property.
Buying Foreclosure Real Estate
The following steps will help you in your endeavour to purchase foreclosure real estate property:
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You should first choose a lender or a bank to get pre-qualified or pre-approved for a mortgage loan.
You can either go into the bank or apply online at a reputable mortgage lending company. As long as you qualify for a loan with the required credit standing and credit scores, your lender will let you have a pre-approval letter to give to your real estate agent. A pre-approval letter does not guarantee mortgage acceptance. It is because, in the home buying process, unexpected incidents can occur to hinder the process.
Nevertheless, many foreclosure companies, such as Fannie Mae, will not even consider your offer on the home unless you provide the company with a pre-approval letter to let them know that you are eligible and qualified to purchase the property. You can also prove that you have the funds by providing them with a statement from your bank.
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Select a registered real estate broker or agent who is knowledgeable about the process of selling foreclosed houses.
Your realtor will show you various foreclosures that meet your requirements. You must understand that most foreclosures are sold as an “as is” deal.
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Once you’ve settled on a property, you should have an inspection performed
which you will be required to pay for whether you complete the purchase of the real estate property or not. Hiring inspectors might include not only home inspectors but also inspectors who will inspect the parcel for pest, structural and environmental problems, as well as for mould. -
If you are satisfied with your inspection and ready to proceed with an offer,
Your real estate agent will fill out the contract according to the request you want to make. They will help you decide on a reasonable but good offer for you.
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Give the real estate agent the earnest money to submit with the contract offer at the time of the request
It’s in escrow until closing. Your earnest money is usually $1000; however, sometimes more is required. If your deal is a cash one, your intense money requirement may be at least 10% of the property’s buying price.
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Hire an attorney
Your attorney will make sure that there are no additional liens or judgments attached to the real estate property and represent you at your closing to ensure that all paperwork is accurate.
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Look over your contract
The foreclosure supplement added to the real estate contract may include a requirement for you to pay a “per diem” charge or a fee for each day after that that you do not close on the designated or original closing date. The price is generally $100 per day. However, some foreclosure companies are no longer charging a per diem. If you do have a per diem clause in your contract, you should inform your lender and attorney from the very beginning of the buying process of how important it is for you to close on time.