When you’re ready to buy a home for the first time, you might be considering a foreclosed property. As a first-time homebuyer, it may be a very smart decision to buy a foreclosure, but it can also be a very bad decision.
What is a Foreclosure?
A foreclosure is simply a property that was taken by the bank or mortgage company when the owner couldn’t make the regular payments anymore. Taking out a mortgage means you’ll have a lien on your property. If you don’t make the payments on time, the bank has the right to foreclose on the home and take ownership.
Missed payments begin the foreclosure process when the borrower can no longer hold up their end of the contract. After missing payments for several months, the lender will file a public notice with the recorder’s office of the default on the loan.
The borrower will have time to fix the default, but if they cannot, the home will go up for auction.
Where Should First-Time Home Buyers Begin?
The first steps for a first-time homebuyer are all about getting pre-approved. This includes making sure you have a solid credit score and a down payment. Once you’re pre-approved, you can start looking for a home fitting within the parameters of your pre-approval.
As a first-time homebuyer, you may or may not look at foreclosed homes as a viable option. It may depend on what you’re lender has approved you for as a foreclosed property will be sold “as is” without the ability to negotiate repairs.
Why Buy a Foreclosed Home
The main draw to buying a foreclosed property is the potential “good deal” you can get. These homes are sold “as is” and may come with repairs you cannot prepare for in the same way as buying a regular home on the market.
Another reason why you might consider a foreclosure is the ability to customize the home. If you’re in the position where a fixer-upper sounds great, a foreclosure might be the right option for you. Maybe you’re already prepared to redo the kitchen, bathrooms, and other parts of the home. If so, considering a foreclosed home might leave you more room in the budget for repairs.
If you’re in a situation where handling a few repairs to score a good deal doesn’t scare you, a foreclosure may be the right option. Often, you will have the opportunity to inspect the property before it goes up for auction or offers are accepted. Take this seriously and have a professional look at the home to determine the necessary repairs and an estimated cost.
A good Realtor will be able to help you choose the right home for your situation. Not all first-time homebuyers should consider buying a foreclosure. However, a foreclosed home could be the right choice for you. The key is finding the right home for you, regardless of how it’s being sold. Speak with RedZone Realty Group today and find out if buying a foreclosure makes sense for you.