The moratorium on foreclosures comes to an end this month. So now, you may be asking, What are the benefits of purchasing a foreclosure?
We’ve all heard the horror stories about purchasing a foreclosed home–even the name carries a negative connotation. But today, we’re going to look at why purchasing a foreclosure may be a great option for you.
First, what exactly does foreclosure mean?
Foreclosure happens when a borrower stops paying their mortgage and the lender or mortgage investor repossesses the property. The property is then sold through a short sale, listed at a public auction, or sold by the bank or mortgage investor who repossessed it.
Here are the benefits of purchasing one of these homes:
- If the property is bank-owned, it will be sold for the remaining mortgage balance owed to the bank, which typically means it’s going to be below market value.
- During a short sale, the owner sells the home for less than they owe on the mortgage, and are usually more motivated to make a fast sale. So you might even have more wiggle room to reduce your purchase price or negotiate things like closing costs or appliances. These sales can take more time because the bank has to approve the sale.
- As the buyer, you can still use regular mortgage financing and have the same contingency period to do the necessary inspections and due diligence as you would with a traditional home purchase. So you’re not giving up anything, except a little time.
- If it’s bank-owned, the home will be vacant. This is great! It means that you don’t have to coordinate with the current owners when scheduling inspections or walk-throughs.
- In a bank-owned foreclosure, the title will be clear. You don’t have to worry about things like liens, back taxes or mortgage owed by past owners.
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