Want to Buy a Foreclosure? Read These Important Tips First!

Want to Buy a Foreclosure-Read These Important Tips First- 150x150Low interest rates and a large inventory of foreclosed homes seem very attractive for those looking to buy a home for a low price. Whether you are an investor who is looking to make a profit or a simple home buyer looking for a home for his or her family, foreclosed homes are a great alternative to buying regular homes. However, low prices can quickly make you forget some essential home buying aspects, and you can quickly end up with an expensive problem on your hands. You can get some really great deals on foreclosed homes, but you should pay even more attention than when buying a regular home.

Buying a foreclosed home requires a certain degree of experience, in order to protect yourself from buying a home that will require extensive repairs or has some major issues. Here are a few tips that you need to keep in mind when buying a foreclosure.

1. Don’t expect to find out a lot about the home. Foreclosed homes are owned by banks and there won’t be any disclosures when buying such a home. You won’t know who lived in the home before or what kind of people they were. Unless you do some research on your own, you won’t be able to tell what kind of neighborhood the home is located in. You are pretty much buying a home blindly, without finding out too much about the property’s past or present condition.

2. Hire someone who is specialized in foreclosures. Buying a foreclosed home is different than making a normal home purchase. Hiring an agent that specializes in foreclosures can make this process significantly easier and save you from some trouble. When making a purchase like this, you need to move quickly and have all the paperwork ready when it’s needed.  A real estate agent specialized in foreclosures can be of great help with having everything ready on time. A professional can also use his or her contacts in order to help you find more foreclosed homes than you would on your own.

3. Have financing available before you start looking at foreclosed homes. Just like you would when purchasing any other home, you should be at least prequalified for a loan before shopping around. By doing this, you will know how much you can afford to pay for a foreclosed home, which will make searching for the right one much easier. More importantly, you will be able to make the purchase much quicker, and lower the risk of losing the home to another buyer.

4. Prepare for repairs and improvements. Many home owners whose homes were foreclosed might have left the home in a poor state, or even stolen some of the appliances or fixtures. You, the buyer, will be responsible with home repair and replacing all of the missing or broken appliances and fixtures. An alternative would be to apply for a 203(K) mortgage, which is designed for those who are buying a home that is missing certain elements, like toilets, or needs other repair work.

5. Determine if a foreclosed home is right for you. Especially if you are a first time home buyer, buying a foreclosed home might not be your best option. Most people, especially first time home buyers, generally want a home that they can move into without having to do many modifications or repairs in the beginning. Most foreclosed homes will almost always need some sort of repairs or improvements, so you should ask yourself if that is something that you are willing to do before buying a foreclosed home.

Foreclosures can be good deals as long as you know what you are doing, and have proper knowledge of the process of buying a foreclosed home. You have to know how to prepare for such a purchase and what problems you may encounter in order for this to be a great alternative to making a regular home purchase.

Home Affordable Foreclosure Alternatives Program – What You Need to Know

Home-Affordable-Foreclosure-Alternatives-150x150Not being able to afford your mortgage anymore can be a stressful experience. Knowing that you will eventually have to abandon your home and move again is not pleasant, especially knowing a foreclosure will leave a large black spot on your credit report. Fortunately, the Home Affordable Foreclosure Alternatives (HAFA) program offers home owners who are facing imminent foreclosure two options, which can make this experience more bearable. HAFA helps home owners who are eligible by providing protection and money if they decide to do a short sale or Deed-in-Lieu of foreclosure.

The Home Affordable Foreclosure Alternatives program is designed to help borrowers and their lenders to work together to avoid foreclosure. Lenders, like home owners, want to avoid foreclosure, because it’s a long and expensive process. The alternatives to foreclosure that HAFA offers are much more attractive for both parties involved.

Benefits of Home Affordable Foreclosure Alternatives

The HAFA program gives home owners the chance to avoid foreclosure by performing a short sale, which means selling the home for less than you owe to your lender, or giving the home back to your lender, known as a Deed-in-Lieu of foreclosure. Here are the most important benefits that this program offers:

  • After completing a short sale through HAFA, you will be free from your mortgage debt, unlike when you perform a regular short sale. The difference between what you owe and what your home sold for will be waived.
  • After closing, the Home Affordable Foreclosure Alternatives program may offer you $3,000 in relocation assistance, if you are eligible.
  • You are entitled to free advice from a professional, such as a HUD-approved housing counselor or a licensed real estate agent.
  • Lenders work with you to determine a good short sale price and are required to let you try to sell your home through a short sale or accept a Deed-in-Lieu of foreclosure before foreclosing on your property.
  • When using the HAFA program, your credit score won’t take as big of a hit as it would if you did a conventional short sale.

HAFA Eligibility Requirements

The first step to qualifying for the Home Affordable Foreclosure Alternatives Program is to apply to HAMP, Home Affordable Modification Program. In order to qualify for the HAMP program, you will have to meet the following criteria:

  • The home must be your primary residence.
  • Your mortgage must have originated before January 1, 2009.
  • The mortgage loan amount must be less than $729,750.

If you don’t meet the qualification criteria for HAMP, then your best choice is finding a short sale agent to assist you. If you are eligible for HAMP, it doesn’t guarantee that you will qualify. However, if you want to do a short sale, then being eligible but not qualifying is good news. If you are eligible, but the Home Affordable Modification Program turns you down, then you can qualify for HAFA. You can also get accepted into HAMP, but stop making mortgage loan modification payments in order to be able to apply for HAFA.

You can find out if you qualify for the Home Affordable Foreclosure Alternatives program by simply speaking to your lender. Foreclosure is hard on your lender as well, so they will try to avoid it and give you other options. Fortunately, the government is also willing to help through programs like HAFA, which are designed to help you get through a difficult period of your life much easier.