Four Advantages of Buying a Foreclosed Home

Four Advantages of Buying a Foreclosed Home

Foreclosed properties can be a great investment if you know how to negotiate with banks and fix up houses.

In these days of record foreclosures, many people are losing their homes because they can no longer afford to pay the mortgage payments. However, although this seems like a losing situation, there are some people who are thriving as a result of foreclosed homes. Some people in the real estate game are buying up foreclosures and reselling them for a profit. There are also some people who are in need of a home and benefiting from foreclosed homes. Here are four advantages to buying a foreclosed home.

Better Chance of Negotiation
With all of the foreclosed properties, banks are often anxious to get rid of some of the homes on their list. As a result, you have a better chance at negotiating with them on the price and conditions of the sale. This means you can often talk them into making repairs on the home or other minor changes if you agree to buy it. In some cases, the bank may even be willing to pay part or all of the closing costs.

Great Price on a Fixer Upper
If you enjoy working with your hands and you are good at fixing homes, you can get a great deal on a foreclosure that is in need of repairs. Even if you do not plan to live in the house, you can fix it up and sell it for a profit. Many investors are doing that these days because you can fix up a home in a matter of a couple weeks and make a profit of thousands of dollars!

Moving In Immediately
Most foreclosures are empty homes because the previous owners have already left it behind. Vacant homes are great because you can start moving in as soon as you finalize the paperwork. This is easier than waiting until the current owners move out because you do not have to pay your own rent or house payments while waiting for the owners of your new home to move out.

Flexible Financing
Banks do not want foreclosures on their accounting books. The longer they are on their books, the more anxious they are to get rid of them. This can be great for qualified buyers. Banks will be willing to work out more flexible financing options with potential buyers just to get the foreclosed homes off of their hands. Keep this in mind when searching for the foreclosed homes that you are considering purchasing.

If you want to take advantage of a foreclosed home in your area either for your primary residence or as an investment opportunity, now may be the best time to do it. Mortgage rates have been dropping recently and they are currently under five percent. Shop for a foreclosed property today to take advantage of the low rates and other incentives going on in the mortgage industry right now.

Four Obstacles to Getting a Mortgage

Four Obstacles to Getting a Mortgage

Many people have a dream of owning their own home, but they have several obstacles standing in their way. Fortunately, these obstacles can be overcome.

We reported on the dropping mortgage rates yesterday, but the low rates do not always mean that you can get a home loan these days. Credit has gotten tighter as banks have increased restrictions on individuals and companies. There are four basic obstacles to getting a home loan even for some qualified buyers.

Credit Problems
If you have any credit problems at all, now is the time to get them fixed before applying for a home loan. These days, you have to have near perfect credit in order to qualify for a home loan. Late payments on credit cards, utility bills and other debts can drop your credit score and make you a less attractive risk for a mortgage loan.

Down Payments
One of the biggest obstacles to getting a mortgage loan these days is the down payment aspect. New home buyers have trouble coming up with a sizable down payment for a home. With most traditional mortgages, you need at least a 10 percent down payment before you will get approved for a house loan. With the tighter restrictions, you may need 20 percent or more in order to qualify for a home loan. If you have bad credit or damaged credit, you may need even more than that.

Income
One aspect of a mortgage is based on the potential borrower's income. Borrowers who have a low income may not be approved for a loan big enough to have a mortgage if their income is not high enough to make the monthly payments. Another income issue is the stability of the income. If you are trying to borrow money for a mortgage but you have just started a new job or if your job is unstable, you may have a problem qualifying for the mortgage. This often happens in cases in which a potential borrower is self-employed and they do not have the paperwork or proof to prove their income over previous years. In these cases, you may need a larger down payment in order to bring the monthly payments down or you may need to provide the proof of your income and its stability so the lender knows you have the ability to make the payments.

Appraisals
When you are trying to get a mortgage, part of the approval process relies on the home's appraisal. If the lender feels the appraisal is too high, you may have a problem getting the loan. However, you can always shop around and consider other lenders. Some lenders are willing to take the risk while others are not.

With all of these obstacles to getting a home mortgage, there are solutions. The solutions may take some work and dedication, but they are not impossible to accomplish. With the credit aspect, paying your bills on time for the next six months to a year will bring your credit up. With the down payment aspect, you may be able to borrow some money from family members or apply for federal monies set aside for first-time homebuyers. The income problem may be a little harder to overcome, but it can be done. Just keep trying and you can take advantage of these dropping mortgage rates while they are still effective.

Tips for Getting a Mortgage with Bad Credit

Tips for Getting a Mortgage with Bad Credit

Some people with bad credit may think they can never realize their dream of owning a home. However, with some simple tips and some dedication, you can still get a mortgage in spite of your bad credit.

With credit cards, student loans and medical bills plaguing many American consumers today, a huge number of people have bad credit. Even the ones who are trying their best to pay off their debts have some work to do before improving their credit score. As such, it's difficult for many of them to get a mortgage because of their bad credit. It is more difficult to get a mortgage if your credit is bad, but it's not impossible. Following are some things you can do to still get a mortgage regardless of your credit score.

Gather your available cash. The best thing you can do when trying to get approved for a mortgage when you have bad credit is to gather a larger down payment. You may need to clean out some of your bank accounts in order to come up with a sizable cash payment, but it will likely be necessary if you have bad credit. Banks and lenders are much more likely to loan you money on a mortgage if you can put 20 or 25 percent down on the home because you become less of a risk when you do that.

Make your payments on time. A good portion of your credit history is based on how timely you make your payments. You can start improving your bad credit by making on-time payments for six months to a year. Once you do this, you can go back to the mortgage lender and see about getting a loan. Your credit score will have jumped by that time and you may even get better mortgage rates as a result.

Consider subprime lenders. Subprime lenders are more likely than traditional mortgage companies to loan money to borrowers with bad credit. However, some subprime lenders have a reputation for taking advantage of people by charging extra high interest rates. Most of the subprime lenders are out of business due to the tough financial times, but you still may be able to find a few still in business.

It is not impossible to get a mortgage when you have bad credit. Lenders do, however, consider you to be more of a risk when you have a history of late payments, defaulted loans or too much debt. By fixing these problems and making some changes in your spending habits, you can become a more attractive credit risk and realize your dream of buying your first home!