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Whether it is for living or investment, foreclosure properties have become a major attraction for the people. They do not require any insurance, down payments are low when one takes a home path loan and there are loans for the renovation of the houses too. These make them all the more attractive.
If you already own a house and are looking for fresh investments in the market; foreclosures could prove to be a great option. This is because the lenders who have acquired the properties from the defaulters want to get rid of them as early as possible for the maintenance charges they are supposed to pay on them. Apart from this, these properties are abandoned as the bank does not allow anyone to live in the houses under foreclosure and this leads to several issues related to the general upkeep of the house.
This might look to be a great investment opportunity for the discounts one may get when compared to the other properties available in the market. However, there are a lot of issues related to taking these houses too.
Buying a foreclosure home may involve various steps, the first and foremost being finding the right property and the sources where one can find them.
Locating a foreclose property
In the current economic scenario once can easily find the properties under foreclosure.
· One can search through online portals which feature and specialize in the foreclosed property.
· Banks often post the properties for sale which they have acquired under foreclosure.
· The loans for bad credit lender and banks generally try to dispose of the properties acquired under foreclosure. They do not have much time because the longer they hold the property they will lose on the maintenance of the property and the opportunity cost of the money trapped in them which they could have easily lent to other and earned interest on them. Thus Banks generally hire the professionals who are experts in the field, are called Asset management companies and offer their services for a fee. One can approach these Asset management companies in their locality or search for them online. They can get you the best deals available.
· Go for the Auctions where one can find several properties under sale at the same place.
· Fannie Mae and the Freddie Mac offer a list of properties under foreclosure.
· Look for the local real estate brokers. They have complete know how of the properties under foreclosure and can take you for an on-site visit too.
Getting loan for the foreclosed property
When you are looking to buy a property which is owned the by Fannie Mae, things might get a bit tough. Valuations done by the lenders for the house may find certain repair to be done to the house which can make it ineligible for the loans.
In order to provide convenience for the home buyers, Fannie Mae came up with the HomePath loans which do not require mortgage insurance, property appraisal or valuation.
These loans were started during the recessionary phase witnessed by the economy in the year 2008-09 by Fannie Mae to enable itself get rid of thousands of homes acquired as a result of foreclosures.
How Home path loans work?
The guidelines of the loans are decided by the Fannie Mae and they are passed on to the lenders approved by them to follow. As per the regulations, Fannie Mae allows the borrowers to get loans at a low interest rate. For those who are the end-users and plan to stay in the houses they purchase under the foreclosure, a down payment equivalent to 3% is allowed while those looking to invest in these properties have to dole out 10% as down payment.
Interest rates offered under the homepath unsecured loans the conventional loans. However, given the fact that there is no Insurance attached to the loans, they still work out to be a profitable option.
These provisions have turned the homebuyers towards taking a foreclosure property which is generally priced lower when compared to the other mortgage loans.
Negotiations for the best deal
While the properties under foreclosure remain closed or vacant, there are doubts with regard to the damage caused to the property and the kind of expenses one would have to bear on the same. This would often make a central point of taking a purchase decision.
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