Ten years ago, home markets were in a rage, and prices were skyrocketing as buyers struggled to keep pace with the sellers market. However, now that the economy has shifted, and many people have lost their homes to foreclosure, the market has spiraled downwards into a severe buyers market. The only problem now is that though houses are easy to find, finding getting loans is becoming a problem.
The best way to be assured that you can qualify for a home loan and get through the closing process is to buy a home with plenty of equity, and if you can, pay a sizable down payment of 20% or more.
The second part I can’t help you with today, but the first, that’s where the real magic happens. Banks are having to take houses back left and right, which means they’re in over their eyeballs with property they don’t want to manage. So how do you find a good deal on a home? You buy foreclosed home and save money that way!
To buy a foreclosed home, you can check your local newspaper for a weekly list of auctions, or you can hire an agent to bird dog for you. Either way works, but you’ll have to be fast because real estate investors are aware of the same tricks, which is how they make so much money flipping homes.
That being said, if you are patient enough, you should be able to get your hands on a home with at least 10-20% equity, which is perfect for getting a mortgage loan.
Since most investors won’t touch homes with less than 30-40% equity, the only real competition you’ll have is other home buyers looking to buy a foreclosed home and save money.
One precaution though, when buying a foreclosed home, is to make sure that you have a full inspection done. Even though the banks will usually only sell homes “as-is,” it’s important that you know what you’re getting into. Being armed with an inspection will help you evaluate the risk against the deal to see if it’s worth your time. Also, some FHA loans won’t be approved unless the home is in good condition, so you might have to put a bit of work into the property before the loan goes through.
Still, with a little bit of due diligence and hard work, buying a foreclosed home is a wonderful shortcut to being a new home owner.