How to Buy a Foreclosure
Thursday, October 12, 2017
On occasion, a homeowner isn't able to make their full mortgage payments on the home and the mortgage lender has to seize the property and sell the home. When this happens, it's tragic, but it can be an opportunity for another buyer.
If you're in the market for a new home, a foreclosure property might be right for you. Before you dive in, you should consider the pros and cons.
- The house is already vacant, so you can move in faster.
- Foreclosures are usually priced low, so you'll be able to get more house than you would normally be able to afford on your budget.
- Sales are generally as is, so you can't negotiate any repairs or upgrades
- The pool of homes you can choose from is more limited if you're only looking at foreclosures.
How to buy a foreclosure
Buying a foreclosure isn't completely different than traditional home buying, you just need to be a little more specific about the properties you're looking at. Here's a rundown and what you'll need to do.
Decide how much you can afford
No matter what kind of house you're going to buy, it's important to know how much you can spend before you get started. Start by adding up all your monthly debts. That would include your estimated utilities, your car or student loans, credit card bills, and anything else you owe on a monthly basis. Then take a look at your savings and decide how much you have for a down payment. Once you have those two numbers you can use a mortgage calculator to estimate how much you can afford to spend on a house.
Getting pre-approved will give you a better idea of how much money the credit union will be able to loan you based on your income, existing debts, and credit score. Our Member Service Representatives can help SAFE members get preapproved for a variety of different mortgage types and at a competitive rate. We'll need a little more information about you, so be ready with this information before you start the application:
- Pay stubs, tax returns, and W-2s for the past two years
- Bank statements
- Investment statements
- Driver's license or passport
- Social Security number
Find a real estate agent
Now that you're ready to get started, it's time to find a real estate agent that specializes in foreclosures. This person will help you navigate the entire process.
Find a property
Now you're ready to find that perfect home! You can find a foreclosed home on any MLS listing site, like Realtor.com or Zillow. SAFE also offers a list of recent foreclosures in our area. Once you find the home you want, you can work with your real estate agent and your SAFE Member Service Representatives to complete the sale.