One of the ways you could buy a new home is to search for those houses that have been or are in foreclosure. There are times that you can get a good deal with a foreclosed home but you must take any repairs that might need to be made into consideration as well. There are several different types of foreclosure homes for sale. Take a look at what to expect and make your choice depending on your needs.
The first type of foreclosure type is the short sale or pre-foreclosure home. This is when the homeowner still controls the home but may have been having trouble making payments in a timely manner. They have stopped making payments to their lender and have negotiated with the lender to sell the home at a discount to what is actually owed on the mortgage. Once the owner has signed the short sale agreement, they will move out of the home.
You can find short sale homes via a real estate agent or other times through online listings. You can make an offer on the home to the lender or owner. The owner during this time will still be given time to pay off what they owe on the mortgage unless they decide to go ahead with the sale.
If the house doesn't sell at the pre-foreclosure stage and the owner has not paid off the outstanding amount on the mortgage, the house will go into full foreclosure. This is when the lender takes control of the property and will be sold at an auction.
Auctions are typically conducted via a third party such as the sheriff's office or through a trustee. The highest bidder will win the property and the amount is paid on the spot. The auctions are usually cash only, although some states will allow for a deposit on the house. It is more common to pay after the auction is finished.
Real Estate Owned and Government Owned
The most popular way to buy a foreclosed home is via the real estate owned route. This is typically the safest, but it also has the most competition to buy the house. The property will most likely have the most value in price as the real estate agency or lender bought the home at the auction at the default price. They will most likely want to move the home quickly so the home is priced to sell.
There are also government-owned homes. This might take longer to purchase and will definitely involve more paperwork than your typical foreclosed home. These homes can save you money and many of the agencies who sell these homes will offer financing to help with the purchase. For example, you can buy homes from the Federal Housing Administration, U.S. Department of Veteran's Affairs, Fannie Mae, IRS or Small Business Administration.