Buying A Foreclosure

What You Need to Know If You’re Buying a Foreclosure

Buying A Foreclosure, What You Need To Know

You’ve probably seen the stories and ads—foreclosed houses and condos selling for pennies on the dollar—and there’s no question banks are willing to sell their REOs (real estate owned properties) at sizable discounts.

But foreclosures almost always come with complications that smart shoppers need to know about in advance.

Here’s what you need to know before you dive into this niche market of buying a foreclosure.

Know What to Expect From a Foreclosure

A foreclosure probably won’t be in pristine condition when you buy it. Foreclosure proceedings often take months (more than a year in some states) before the owners are evicted from the property.

During that time, the house is in legal limbo. The occupants have little incentive to maintain it or make repairs, and the property inevitably deteriorates. In some cases, the foreclosed borrowers vent their frustrations with the bank on the house: ripping out cabinets and fixtures, punching holes in walls and even damaging heating/air conditioning systems.

After the eviction, foreclosed houses then frequently sit empty for months while the bank decides how to resell and for how much. Sometimes the bank may perform basic repairs, but often, the house is in a rundown condition when it is finally offered for sale.

Get Pre-Qualified Before Buying a Foreclosed Property

The first step is to get pre-qualified by a mortgage lender. Foreclosures are usually great deals, and they get gobbled up very quickly.

Don’t wait to apply for financing approval, which takes at least a week or two to obtain. Make sure you have enough to cover the down payment once you find a foreclosure—and that you can cover inspections, insurance, pest control and any other unforeseen expenses that may come up.

Get Professional Help With Buying a Foreclosure

Most banks hire real estate agents to list and market their foreclosures. They represent the bank in all negotiations, not you.

To ensure that you have adequate representation, have a REALTOR® who specializes in the area serve as your buyer’s agent and to advise you on key issues: pricing, local zoning issues or state law constraints that could seriously affect your purchase. For example, some states have mandatory “redemption” periods in which foreclosed families have the opportunity to reacquire their homes.

A buyer’s agent can also help you check the local public records to determine whether there are any recorded liens against the property you are considering. These might include liens for unpaid taxes, repair bills or homeowner’s association dues: If you purchase the home, you will have to pay off any outstanding liens.

Final Steps Before Buying a Foreclosed Property

Once you’ve found a home, bring in a building inspector and a contractor to give you a good idea of what needs to be done and the approximate cost of the work. A report of the property’s condition will be submitted to the lender before the loan is made.

As a potential buyer, you need to ask yourself these questions:

  • Am I prepared to invest the money and time needed to bring this house back to a habitable condition? Do I know all the problems the house presents?
  • If the utilities have been turned off for months, do I know what works in the house?
  • Have I been given enough time to get the house professionally inspected so that I have detailed knowledge of how badly off the property may be?

If you decide you’re ready to make an offer, work with a REALTOR® to negotiate a good deal. Many lenders are willing to offer lower down payments, repair reimbursements and other incentives for the right buyer.

Original article: http://www.realtor.com/advice/what-need-know-buying-a-foreclosure/

Mortgage rates

30-Year Fixed Mortgage Rates Drop Below 4%

30-Year Fixed Mortgage Rates Drop Below 4%

Mortgage rates have gone from cheap to dirt cheap in the span of one week, thanks to fixed-rate home mortgages falling to below 4% and hitting new lows for the year.

Now, buyers can lock in the lowest rates of the year at 3.97% for a 30-year fixed-rate mortgage, down from 4.28% a year ago and 4.12% last week, according to Freddie Mac.

“Mortgage rates are down sharply following the decline in the 10-year Treasury yield for the second straight week,” said Frank Nothaft, vice president and chief economist at Freddie Mac, in a released statement.

The week’s mortgage rates mark the lowest level since June 2013, according to the report. Nothaft attributed the drop to “continued investor skepticism regarding the precarious economic situation in Europe.”

The 15-year fixed-rate mortgage also reached a new low at 3.18% down from 3.33% last week and 3.30% a year ago, according to Freddie Mac.

While mortgage rates are falling, home prices are rising, and 84% of people surveyed expect prices to go higher, according to the Bankrate’s Financial Security Index.

The decline in mortgage rates could spur more home sales this fall, although if positive economic and employment data continue to be reported, mortgage rates likely will rise, according to realtor.com® Chief Economist Jonathan Smoke.

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mortgage-rates

Mortgage Rates Inch Up But Stay Near Year Lows

After weeks of holding steady at their lowest levels of the year, mortgage rates for most U.S. home loans saw marginal increases this week.

The average for a 30-year fixed-rate mortgage rose to 4.12% from 4.10% last week, according to the latest survey from mortgage buyer Freddie Mac.

A year ago at this time, the 30-year average was 4.57%.

“Mortgage rates were up slightly this week, following the increase in 10-year Treasury yields, despite last week’s disappointing employment report,” Frank E. Nothaft, Freddie Mac vice president and chief economist, said in a statement.

“The U.S. economy added only 142,000 jobs in August, after a 212,000 gain in July and a 267,000 increase in June. The unemployment rate fell to 6.1% in August from 6.2% the previous month.”

The average rate on a 15-year fixed loan also rose this week, inching up to 3.26% from 3.24% last week. It averaged 3.59% at this time a year ago.

Similarly, averages for the two most popular hybrid adjustable-rate mortgages edged up slightly. The five-year ARM rose to 2.99% this week, from 2.97% last week. A year ago, it averaged 3.22%.

The one-year ARM average is trending at 2.45% this week, up from 2.40% last week. It was at 2.67% at this time last year.

Rates have fallen recently after rising at the end of 2013, when the Federal Reserve announced it would begin to curb its bond-buying stimulus program. The program has helped offset dramatic gains in real estate prices and kept affordability elevated while the market has stabilized.

In the latest Mortgage Rate Trend Index by Bankrate.com, 57% of the loan analysts polled believe mortgage rates will continue to hover around their current levels, while 29% predict rates will increase.

“Bond prices have slipped with the slightly better economic news,” said Derek Egeberg, branch manager at Academy Mortgage in Yuma, AZ. “Look for this trend to continue and for mortgage rates to slide higher through the end of the year.”

Source: http://www.realtor.com/news/mortgage-rates-inch-stay-near-years-lows/

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Mortgage rates

Mortgage Rates Hold at Yearly Low This Week

The 30-year fixed-rate mortgage is heading into the holiday weekend at its yearly low, giving home shoppers and home owners another opportunity to snag the lowest rate of the year, Freddie Mac reports in its weekly mortgage market survey. Continue reading “Mortgage Rates Hold at Yearly Low This Week”