Should you buy a foreclosed home? The savings can be huge, but so can the hassles and pitfalls. Here are a few tips for first-time foreclosure buyers to make sure the experience is a rewarding one.

How much can you save?

According to the National Association of Realtors (NAR), foreclosures sell for about a 20 percent discount compared to conventional sales. But that’s an average – many sell for much bigger discounts, and some sell for close to market value. Expect smaller discounts on homes that are in good condition and have not been on the market long.

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The FHA is betting housing can recover enough to expand financing and earn bigger fees to revive its record-low capital levels. The agency increased the size of mortgages it’s willing to insure to as high as $793,750 in Hawaii and $729,750 in the costly real estate markets of states including California, Florida, and Virginia. In his State of the Union address on Jan. 24, President Barack Obama proposed a new refinancing program that may expand FHA’s responsibilities, and risks, even further.

It’s “not the best time to begin guaranteeing houses that the average American couldn’t afford,” said Anthony Yezer, director of the Center for Economic Research at George Washington University. “It may be that the insurance fund even now is insolvent.”

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A reverse mortgage is a loan for senior homeowners over 62-years-old that uses some of your home equity as collateral. If you keep paying your property taxes and insurance, the loan does not have to be repaid until the last homeowner moves out of the property or passes away. At that point, the home is sold and the loan plus interest is repaid and the remaining home equity goes to the surviving owner or the estate. If the home is worth less than the loan, the estate is not liable for any losses.

Most homes are eligible, although mobile homes must be on owned land and built in last 30 years. Your home needs to either be free and clear of other loans, or any existing mortgage will first be paid off with loan proceeds before additional money is taken out. For instance, you might still owe $100,000 on a loan and have monthly payments of $1,000 a month. With a reverse mortgage, you could pay off the loan and also receive perhaps $1,000 a month in extra income. This would leave you $2,000 a month richer.

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The five most likely U.S. metropolitan real estate markets to recover in 2012 are demonstrating signs of economic recovery in at least a Miami, Florida couple of areas, despite the troubled U.S. economy. However, there are few other similarities aside from growing employment and a climate for change.

A sense of cautious optimism prevails in Miami, Florida where the real estate market is already rebounding. Home and condominium sales along with prices are climbing, with more sales to international buyers than anywhere else in the nation. However, it’s not all sunshine and roses in Miami, where high crime rates and a sense of a third world region in many areas of the metropolitan area could hurt the city over the long haul.

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In his State of the Union address, President Obama unveiled a new plan for the struggling U.S. housing market. As described, the program would let responsible homeowners take advantage of record-low borrowing costs through refinancing. Host Scott Simon talks with New York Times columnist Joe Nocera about the president’s plans.

The future of the state of the U.S. housing market was a primary focus for the White House this week. On Tuesday’s State of the Union address, President Obama unveiled a new plan to try to correct the housing downturn. It would allow qualifying homeowners the chance to refinance their mortgages at historically low rates.

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After nearly a year of negotiations, federal and state officials and major mortgage servicers are moving closer to a multibillion-dollar settlement over alleged foreclosure and mortgage loan-servicing abuses. A deal could be finalized by early February, some officials say, although that’s not a certainty. And its terms could change.
Based on interviews with officials on both sides of the negotiations, USA TODAY reporter Julie Schmit explains what a potential settlement might include and what it’s likely to mean for borrowers and the housing market.

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Fewer people are buying and more people are renting — some by necessity and some by choice.

Information from the U.S. Census Bureau indicates that 66.3 percent of Americans owned their own home in 2011, down from a high of about 69 percent in 2004.

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For George Allen, buying houses and giving his children the mortgage over the years has been a way of “keeping it in the family.”

It’s a win-win. Allen acts as the bank. He gets a decent return on his investment as his children pay down the loan with interest, consistent with prevailing mortgage rates. The kids avoid mortgage fees and closing costs, and get to space out tax and home insurance payments.

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Rosie Hayes can already imagine what her home is going to look like – three bedrooms, two baths on a single level with a big kitchen because she likes to cook for her mother, daughter and grandchildren.

“It doesn’t have to be nothing fancy,” she said. “Just something I can maintain myself.”

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Foreclosure commonly represents the end of a struggle. A borrower can’t pay a mortgage, loses a home and moves on.

But Karen Mena, a 38-year-old county worker, never gave up. Mena fought even after her San Bernardino home was no longer hers. And she won the three-bedroom house back — at least for now.

Full story is available on Los Angeles Times