Foreclosure properties can present excellent real estate opportunities, but they can wind up being very problematic as well. Dean Graziosi outlines the various stages of foreclosure in a post on his website. Understanding what all the jargon means is important when taking such a risk.
Buying any home can be risky, but when a home has gone into foreclosure, there are other factors to consider. Knowing the pros and cons is an important part of making the right decision.
One pro of purchasing a foreclosure property is that you may be able to get it for an unbelievable price. While this isn’t always the case, many homeowners have been able to get great real estate deals this way.
One definite con to purchasing a foreclosed property is all the additional work that may need to be completed. Often times, homeowners save a lot of money on such a purchase, but wind up spending even more than they saved in repairs. That is why it is important to know exactly what you’re getting before buying it. Figure out how much money you will actually save, then compare it with the costs of repairs. Make sure you are also aware of any hidden costs that may be present.
As Dean Graziosi points out, there are different levels of foreclosure, so understanding where the particular home you are looking at is in that process is important. This is why you should ask questions before making a decision.
If you are purchasing a foreclosed home you plan to turn around and flip, you may wind up coming out ahead. This is another possible pro to making such an acquisition. If you are already anticipating fixing up a home, you won’t be surprised by the costs of doing so. In this case, getting a great deal and saving money would be to your advantage.
Buying a home that is in the foreclosure process isn’t easy. This is another con. As pointed out in an article posted on USA Today, you should be careful to avoid repeating the mistakes of the previous owners. Remember, the home went into foreclosure for a reason. Finding out why may be helpful.
One of the perks of buying a home in foreclosure is that you may not be required to make a down payment. Again, this may be a pro, but it can also go the other way and become a con very quickly. No down payment may mean a higher interest rate and larger house payments each month. When you stop to consider this, are you really saving money in the end?
When you purchase a home in foreclosure, you may also be required to obtain a loan with an adjustable mortgage rate. While this can save you money some months, it does present instability because you are never absolutely certain what your monthly payment and interest rate will be from one month to the next. This, too, can serve as both a pro or con depending on the way it goes.
Before purchasing a home in foreclosure, do your homework. Know what you’re getting into and understand the risks associated with it. You can read more about this and other relevant real estate topics by visiting Dean Graziosi’s website.