Even if you can manage to fork up the necessary cash required to purchase properties these days, getting a good one for the right price can be quite challenging. There are a number of factors which have to be taken into account before buying your dream house. Getting a decent place for a good bargain is an even more daunting task.
One of the easy ways to manage this is to find properties which have been foreclosed by banks, which makes them bank owned and ready to be put up in the market. However, just because a deal is too good to be true, doesn’t necessarily mean it is.
There are a number of reasons why you can’t find a foreclosed property as easily as back in the day.
Decreasing number of foreclosures: Not many homes are being foreclosed by banks because nowadays people are able to meet all their financial commitments and dues for that matter. Only when they fail to meet their dues, can the bank then foreclose and put up properties for auction. With decreasing number of defaults or bankruptcy’s, there are limited number of avenues available to purchase bank owned properties.
Properties being auctioned: most of the auctions conducted are cash based and the bid amounts has to be paid up right after the property has been auctioned. There might be a number of buyer’s who will be at the auction trying to outbid each other, but there is no way they can outbid professional real estate dealers. These are also people who will have a couple of hundred grand cash just lying in their pockets to outbid any other buyer hands down. Buying at auctions is not as simple as it looks.
Property inspection: Foreclosed homes may already be in need for desperate repairs and sometime even a major overhaul for that matter. Since the owner could not even afford o pay for its mortgage, chance are it might have been a couple for years since the last time he made renovations and general maintenance for that matter. So when you buy a foreclosed home it becomes your responsibility to take care of the repairs which are absolutely essential. In case you have not planned for such a major budget crunch, it is advisable to inspect such properties beforehand to ensure and if possible get an estimate.
There are a number of factors to be taken into account before you can bid for a foreclosed home. Talk to experts to help you reach an informed decision to deem the investment prudent.
A reverse mortgage is a type of loan that allows homeowners to receive payments on their house as opposed to them making payments to the lender. At first glance, this option seems too good to be true. But, before committing to it, there are some nitty-gritty details that people must consider when opting for this type of financing. So, here is some information regarding the pros and cons to consider when getting a reverse mortgage.
Advantages
Disadvantages
A reverse mortgage is a loan that allows individuals older than 62 to improve their financial well-being. They can convert part of their home equity into lump sum cash, fixed monthly payments, or line of credit, according to their preference. The money can be used to pay for medical bills, in emergencies, or to pay off a mortgage. Here’s what you should know about reverse mortgages in case you’re looking for one.
How much can you borrow?
For reverse mortgages, the loan amount can’t exceed the value of the property against which it is borrowed. Federal regulations require lenders to ensure that the loan amount doesn’t exceed the value of the house by structuring the transactions accordingly. Additionally, these regulations state that the owner/borrower is not liable to pay off the balance amount in case it exceeds the property value.
How are reverse mortgages paid for?
A reverse mortgage is payable when the borrower sells the house, relocates permanently, or dies. Unlike forward mortgages, reverse mortgages don’t need the borrower to make any monthly payments. They are only liable to pay interest on the money received, which is rolled back into the loan balance. While the owner gets to keep the title to the home, their home equity reduces over the loan tenure.
Who can take a reverse mortgage?
This type of loan is ideal for seniors and retirees whose net worth comes mostly from the value of their home. Seniors who don’t qualify for a home equity loan or can’t refinance due to limited cash flow or poor credit can opt for reverse mortgages. Home Equity Conversion Mortgage (HECM) for purchase is a reverse mortgage that allows seniors to buy another property. That said, it is complex, and you should study the risk factors before getting one.
What are the risks associated with reverse mortgages?
Reverse mortgage scams are not unheard of. Unreputable vendors could offer to help seniors secure reverse mortgages by undertaking house repairs. They don’t provide quality results and get away with the homeowner’s money instead. For spouses living together in a home with only one spouse named as a borrower on a reverse mortgage, the other spouse can lose the home if the borrowing spouse dies first. Besides, reverse mortgage lenders charge fees and closing costs and may also charge mortgage insurance premiums for federally-insured HECMs.