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What to Look for When Buying a Foreclosed Home

by Mark Rieger, Mark Rieger Realty

 

 
 

While the market seems to be slightly improving, there doesn’t seem to be a shortage of foreclosed homes. Purchasing a foreclosed home can save you money and even possibly prove a lucrative investment, but it’s important to be educated on what to look for when buying a foreclosed home.

 

  • Budget carefully. The “total price” of a foreclosed home is not necessarily the agreed upon price or the bid made at auction. The total price takes into account all back taxes, liens, and any other financial responsibilities the purchaser inherits from the purchase of the property, which takes us to our next point:
  • Do your research. Once you have found a foreclosed home you are considering buying, go to the County Recorder's Office. The County Recorder's Office can provide you with the amount in back taxes owed, which generally isn’t included in the sales price. They can also provide you with the Trust Deed, the Notice of Foreclosure Sale, and the Notice of Default on the property. These documents are public record and reflect how much was originally loaned to the homeowner, when the loan was issued, how much was owed at the time the Notice of Default was filed, and how much the bank paid for the property.
  • Schedule an inspection. Before making any offer, have the foreclosed home thoroughly inspected by a professional. Make sure the electricity is turned on when you go to inspect the property. Check the roof, all electrical appliances, the air conditioner, and load bearing beams. Check for termites, mold, structural damage, and bad grout. Once the home is inspected, have the inspector give you an estimate for any costs and add it to your budget. Foreclosed homes are usually sold “as is” and once the contract is signed, any repairs are your responsibility.
  • Consider the selling process. Is the sale an auction or is the property Real Estate Owned (REO)? Auctions can be a good option in market liquidation; however, purchasers at auction do not often have time to make necessary inquiries. Auctions can also cause a competitive and emotional environment, so be very cautious not to overbid. You are not in competition with the other bidders. You are in competition with the market value of the foreclosed home. Also, back taxes or liens are usually not included in the bid price, so keep that in mind. REO properties are those that fail to Sell at auction and are being sold by the bank. This process tends to offer the purchaser more time to discover any drawbacks and react accordingly.
  • Choose the right lender. Good financing options are still available to many qualified homebuyers. A good, reputable lender will take the time to review your financial long- and short-term goals. They will explain the process of buying a foreclosed home to you clearly and help you find the best solution for you.

I keep your goals in mind and want you to get into a home that is right for you. If you are looking to Buy a new home, or want to learn more about what to look for when purchasing a foreclosed home, contact me to discuss your options. I'm here to help!

Why Do I Need a Mortgage Pre-Approval?

by Mark Rieger, Mark Rieger Realty

 


 
 

While it's true that mortgage lenders are tightening the purse strings, home loans are still out there and readily available to those who qualify. The only way you will know if you do qualify is to seek a mortgage pre-approval.

A mortgage pre-approval will help: 

  • confirm your eligibility for a home loan
  • establish a price range
  • give you confidence in the home buying process
  • reassure home sellers of your ability to secure a loan

Your loan application information will be the basis for your mortgage pre-approval. Lenders will also weigh heavily three credit reports and income verification. Before you shop for a mortgage pre-approval, review your own credit history. Determine what you can comfortably afford to pay for housing including taxes and insurance.

Before you visit a lender, or fill out a loan application, check your credit report for potential problems. Your credit score will help determine whether or not you get a loan, the terms of the loan and the interest rate you will pay.

Federal law entitles you to one free credit report in a 12-month period from each major credit reporting agency. Get a free report at www.annualcreditreport.com. Check the report for errors and resolve errors before you apply for a loan. You can also call the three major nationwide consumer credit reporting companies for your free report:

Mortgage Pre-approval vs. Mortgage Pre-Qualification

A mortgage pre-approval is not the same as a mortgage pre-qualification. Many people confuse the two terms. A mortgage pre-qualification is the first step to getting a mortgage pre-approval. 

During the mortgage pre-qualification process, a mortgage lender will evaluate your financial status based on information you give over the telephone or internet. It does not usually require an application fee or require you to substantiate income and expense claims. The lender will determine how much you are likely to be able to afford for housing. It is important to be completely honest with your lender and yourself during this process. 

A mortgage pre-approval is more formal. It will require fees including an application fee and a credit report fee. You will be asked to provide documents to verify employment or other forms of income. The mortgage lender working on the mortgage pre-approval will pull your credit reports and review your credit history. Mortgage pre-approval is a better guarantee of your eligibility than a mortgage pre-qualification. 

Mortgage Pre-Approval Gives You Bargaining Power

Home shoppers are often disappointed when they are turned down for a loan. Home sellers suffer too when their intended buyer is not able to secure a loan. Sellers are wary of buyers who may not qualify for a home loan. A mortgage pre-approval will give you bargaining power.

Our company has a vast network of lenders and other real estate transaction support services. Contact us today for help getting pre-approved for a home loan. As always, if you or someone you know is looking to Buy or Sell a home in the Central Oregon area, please give me a call.

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