What to Expect When Buying Pre-foreclosure Homes
Pre-foreclosure homes usually happen when the seller or the owner is behind the tax payment or the mortgage amid an imminent foreclosure. Most times, they try to hold a short sale, which means asking the bank or the mortgage company to accept a lower payoff when the home is sold. This usually happens when the current value of the home is lower than the amount of debt owed to the lender or the bank. Even though this does not provide excuse from the delinquencies or the short sale, the pressure is off but getting a mortgage will probably be a difficult process.
Be aware of the ways on how to buy a foreclosed home. When purchasing pre-foreclosure homes, there are some pitfalls that buyers need to be aware of. The time factor is the most important thing. The buyer and the seller might have to wait for several months to complete the sale because the banks have to decide what they can accept. These might not be good deals for people who are not patient or those who do not have time to wait because of urgency. The bank or lender might require that the buyer pre-qualify with it. Before you do this, it is important for you as a buyer to check with your lender.
There might be some fees associated with closing pre-foreclosure homes, which you might not be aware of. For example, the seller might not have paid taxes for several years, which you might have to pay during closing. In addition, if the seller does not get any proceeds from the sale, you might be required to pay the delinquencies that they owe. You need to know that if a seller is not paying is or her mortgage, there are probably other things, such as taxes, which he or she is not paying. You need to determine whether you are willing to pay the additional fees or not. Read more about the foreclosure law at http://en.wikipedia.org/wiki/Foreclosure.
It is important for you to note that when you are buying pre-foreclosure homes at trustee sales, you are buying them as they are. This means that no repairs will be performed by the seller regardless of the condition, the value of the property and the cost of the repairs. It is important for you to make sure that you have the property inspected even though it looks good and comes with an attractive selling price. An inspection might save you thousands that you might have to use on making expensive repairs. However, this should not scare you from buying pre-foreclosed homes, because there are some that come with many benefits.