Obtaining A Mortgage For A Property In Foreclosure

Real estate prices in many areas of the United States have fallen significantly in recent years leaving many homeowners upside down on their mortgages. This means that a homeowner's property is now worth less than the amount owed on the home. When you couple this with the elevated unemployment levels in the country, the result has been an onslaught of foreclosure activity. While the housing market and economic environment has been tough on just about everyone, there is a silver lining for those interested in purchasing a new home.

Depressed real estate prices can equate to excellent real estate bargains for many first time home buyers and real estate investors. No one can say for sure whether home prices will fall further or will soon be on the rise, but you can talk to your real estate agent, mortgage consultant, and financial adviser to get their perspectives. If you decide it is the right time to buy for you, and are searching for a real value, you may want to consider buying a property currently in foreclosure.

Is buying a property in foreclosure right for me?
There are multiple items to consider when submitting an offer on a foreclosed property. Working with an experienced real estate professional may be advised as you try to sort through variables such as:

Buying a home in "as is" condition - When purchasing a home from a traditional seller part of the process includes having the home inspected and then negotiating over which repairs will be made. When a lender is selling a home through foreclosure they may not be willing to make repairs or improvements to the property. While this might not be a problem if you have additional funds to invest into fixing up the home after closing, and/or are willing to put in some sweat equity by doing work yourself, but if the purchase price alone would be tight you might want to think again.

Additional liens against the property - You are going to want to have a title search done on the property. This process involves checking to see if any other person or company has put a lien against the house, which would have to be paid back. Whether the lender foreclosing on the home or the buyer will pay these liens can sometimes be negotiated, but it is important to know about them before closing. Lien holders may include a property owners association, utility companies, local, state, or the federal government for unpaid taxes, or someone else who is owed money by the former owner of the home. Be sure to consult with a real estate attorney to make sure title is clear.

Your Personal Feelings - It can be difficult to know that you are getting a great deal on your home due to someone else's loss. How if feel is a very personal thing, but you can also consider that by buying and fixing up a distressed or vacant property you are helping to improve your community. When you purchase a home you are also helping to stimulate the economy, and that is something you can feel good about in trying times.

By: Anna Platz

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Anna Platz is a writer and SEO Specialist with Wilmington SEO & Marketing based in Wilmington, North Carolina. She specializes in writing about mortgage financing including products such as USDA rural housing loans and investment property loans.