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The past decade saw a record number of home foreclosures. With unemployment and a higher cost of living combined with adjustable rate mortgages, many families had a difficult time keeping up with their house payments. As a result, some families lost their homes. Sadly, this occurrence is so common, that some neighborhoods in some towns have several foreclosed homes just on one street.
Banks continue to look for ways to sell these foreclosed properties. As a result, they might drop prices and offer lower fixed interest loans to qualified buyers. Some home buyers are attracted to the idea of a low-cost investment. Although buying a foreclosed home might be a sound investment, there are certain variables to look at. In some cases, you might be better off purchasing a brand new home.
The first thing to look at is the total cost of the foreclosed home. Are you expected to pay for any court fees that the previous owner could not afford? Unfortunately, some banks pass on these fees to new buyers. Taxes might also be included in the final asking price; if taxes aren’t listed, make sure you know what they amount to in advance. Also choose a fixed interest rate over an adjustable rate mortgage to ensure that you will be paying the same amount of interest over the length of the loan.
It is also vital to look at the overall state of the home. Some foreclosed homes are in better shape than others. Get the home inspected and figure out what repairs and appliances you’ll need. In some cases, buying a new home will end up cheaper.