A foreclosed house is a result of an individual or the previous owner of a particular house being closed to him and is unable or un-wanting to take his house back by releasing it after paying his dues on the mortgage.
The house is taken over by the financier, lender or the mortgager and put it up for resale to get the money back by reselling it through an auction or otherwise. The most common reason attributed to the existence of a foreclosed house is the unhealthy financial situation of the current owner.
Foreclosed homes are normally advertised in newspapers and local media. The real estate agents may also have some valuable information regarding foreclosed houses. Local and county courts would also possess information on foreclosed houses and can inform one about current deals.
Court auctions are usually the most profitable way to buying a foreclosed house. The risks of buying at a court auction are minimal when the house in question is foreclosed by a bank or the HUD (Housing and Urban Development).
Buying a foreclosed house is inexpensive compared to buying normal house. Discounts and differences can be anywhere between 15 to 50%. This enables a lesser down payment, facilitating an average buyer to afford a house in the booming real estate market. Financing these houses is also possible up to 100% in some cases.
There are advantages and disadvantages in buying a foreclosed house. The following issues need to be researched and calculated upon making a decision:
a. Condition of the house, the wear and tear and expenses involved in repairs would add to the cost. The responsibility of fix up would lie on the buyer in most cases.
b. Inspecting the house before buying is very important.
c. Once a house is bought and the deal is made, it cannot be reversed. So, it is important to make sure that the buyer is not burdened with a white elephant.
d. These foreclosed houses need not be necessarily empty. The residents therein are the current owners until the mortgager hands it over to you.
e. The condition of the house may be difficult to assess when a family is already residing there.
Make sure you take necessary care and obtain all pertinent information before buying a foreclosed house. If one is careful enough, realizing the dream of owning your home will be most beneficial by buying a foreclosed house. Only then would the discount advantage work your way.