Home Buyers Should Recognize Opportunity in Foreclosure Homes
While foreclosure rates have continued to skyrocket in the preceding
months, first-time home buyers have definitely found reason to rejoice.
In the past many homebuyers were reluctant to jump onto the bandwagon
and purchase a home in light of prices that seemed to be escalating with
no end in sight. As a result, there were many who made the reluctant
decision to continue renting rather than taking on an unwieldy mortgage
payment. As it turns out, this may have been the best decision they ever
made, because for those who can still afford it there has never been a
better time to snatch up a deal on the real estate market.
At the end of 2008, the real estate market closed with prices nearing a
25% drop from the preceding year. While it is not yet clear whether the
coming year will bring more of the same or whether the economy and the
real estate market will finally experience an upturn, many are already
snatching up deals.
Although many home sellers have slashed the prices of their homes in
order to move them, a large number of first-time home buyers have found
incredible deals in the way of foreclosure homes. In some areas,
the number of foreclosure homes accounts for at least 50% of the
total number of homes for sale on the market, giving home buyers plenty of
properties to choose from.
The precise amount of money that can be saved on the purchase of a
foreclosure home varies, but it is not unusual for a first-time home
buyer to be able to snatch up a home that has been foreclosed and save a
significant amount of money. Oftentimes, the sales price depends upon
the amount of money that was owed on the home at the time the previous
owner defaulted on the mortgage loan. Lenders are in the same boat as
homeowners in that they know they must price properties competitively to
move them. This is good news for first-time home buyers who are looking
to save money.
While a foreclosed home can provide tremendous savings, first-time home
buyers are cautioned that such homes are not completely free from
problems. In many cases, the home may be in disrepair and the previous
owners may have even damaged the home prior to moving out once they
realized that foreclosure was inevitable. Certainly, this is not the
case in all situations, but it is a possibility that buyers should be
In order to gain the most protection possible when considering the
purchase of a property that has been foreclosed upon, home buyers are
encouraged to have the property inspected whenever possible. Not only
should they personally tour the property but also have a licensed real
estate inspector provide them with a report of any possible problems
with the home. In some circumstances this may not be entirely possible,
but doing so can certainly help to eliminate a number of risks that
might accompany the purchase of a foreclosure.
Beyond the dramatically slashed prices on foreclosure properties, there
are also other benefits that are nudging first-time home buyers to step
into the market and make a purchase as well. Over the last several
months, interest rates have been lowered and may continue to fall in the
months to come. There are even some experts who are predicting that by
the end of the year, mortgage interest rates could settle around 4%.
Given the low interest rates and the fact that a buyer can easily
purchase a home for 50% less than what they would have paid just a few
years ago certainly seems to be all the motivation that some home buyers
need. Those consumers who have saved money for just this type of
opportunity to present itself have suddenly found themselves sitting
pretty. Prices are so low in some areas that more than one buyer has
been able to purchase a foreclosure home outright for cash while
others have been able to make a hefty down payment. You can find many
foreclosure homes listing here!
Credit restrictions are still a concern for many and there is no denying
the fact that mortgage loans are not as plentiful or as easy to obtain
as they once were. Lenders are looking for borrowers with exceptional
credit and are not leaving a lot of leeway for prior credit issues.
Still, pressure is increasing for lenders to loosen some of the
restrictions on lending, which should go a long way to help first-time
home buyers even more. You might also want to read
Buyers Beware with Foreclosures