New homeowners don’t always have to buy a new condo or property for their first house. They can consider foreclosed homes to get the same quality at lower prices if they’re on a budget. But even if some of these properties don’t always lead to savings, there are some tips and tricks you can learn to get the best deals from a revitalized housing market.
Know the Options
Foreclosed homes come in six different categories, named after their organizations or establishments that either manage or built the respective property and call for the foreclosure when the buyer can no longer pay their dues:
- Contractor: Handled by construction companies.
- HOA: Handled by homeowners associations.
- HUD: Handled by the U.S. Department of Housing and Urban Development.
- Federal: Managed by the IRS and Treasury Department.
- County: Owned by the county.
- Bank: Funded by the back through mortgages.
Knowing the type of foreclosure helps you pick out the best deal regarding finances or the best option suitable for your situation.
Know the Listings
There are two kinds of property listings you must look out for when seeking foreclosed homes:
- Pre-foreclosures: These houses are up for foreclosure but are not there yet. The organization handling this process has already begun due to the homeowner being behind payments for months on end.
- Short sales: The lender allows the borrower to put the property in question for sale at a lower mortgage amount in a short sale and forgives the rest of the unpaid balance. This is the kind of listing you should look out for if you’re on a budget since it’s a deal you can’t refuse (potential quality at a lower price). When the homeowner can’t find the right buyer, foreclosure happens.
Note: properties on short sale may sometimes be on pre-foreclosure, so you must check with the listing provider for more details.
Review Your Budget
Check your annual income to see if you can afford the properties or listings you are looking at. Get your finances in order, as well, by noting your debts and other payments you are making to get a clearer picture regarding how much you can afford to pay.
Your net income must still allow you to live comfortably while paying your debts. Lenders will also evaluate your debt-to-income (DTI) ratio to ensure it doesn’t go over 36 percent.
Get Pre-Approval
Pre-approval screening expedites the purchase of foreclosed homes, especially when the organization handling said property allows for mortgage financing. This is why you need to review your financials prior, as they will go over your DTI ratio and credit standing to see if you’re good for the money they’ll lend.
Here are the documents you need when applying for pre-approval:
- Credit history.
- W-2s.
- 1099s.
- Bank statements.
- Other financial papers they may require.
Go Online
Virtual listings are a great way to find the best property for your family. Searching is easier since they have indexes for the price, size, location, and other variables pertinent to you. Some sites to check out include:
- Redfin or Zillow: Make identifying foreclosures for sale easy.
- Auction.com: Provides options that are not on Multiple Listing Services.
- HUD.gov.: Previews government-owned foreclosed homes.
- HomeSteps.com: Lists Freddie Mac-owned properties.
- Homepath.com: Lists Fannie Mae-owned properties.
These listings will make it a breeze to find foreclosed homes according to your needs.
One Last Thing
If all else fails, seek out a real estate agent’s help. These professionals can search and negotiate on your behalf for an additional fee. However, if that means a quicker find and lesser hassles for you, it’s definitely worth the investment.
Just be sure that the real estate agent you hire can negotiate for foreclosed homes in Apopka, FL, like those from Orlando REO Professionals! We provide top-notch investment property advice and wealth management throughout the greater Central Florida area in the Orange, Osceola, Seminole, Polk, Lake & Volusia counties! Call us today for more information on foreclosed homes in Orlando, FL or general real estate!