The next wave of home foreclosures in starting to happen around the nation. This is clearly bad news for people who are having trouble making payments on their homes. However, it may be good news for those folks who have the means to invest in the purchase of a home right now. Here are ten tips for people who might be in this lucky financial position:
1. Take your time. The next wave of home foreclosures is expected to occur over a period of three years. This means that you can comfortably take your time in deciding on a home that is the right investment for you.
2. Confirm that you can make your mortgage payments. The first round of home foreclosures primarily affected people who had subprime mortgages that they were likely to be unable to pay from the get-go. This most recent round of foreclosures is affecting people who had stable incomes but then were negatively affected by the economy. Make sure that you have a bit of money in the bank and a back-up plan to make your mortgage payments.
3. Buy a home to rent out. Home values are low but rental prices haven’t dropped nearly as much in most places. In fact, since many former homebuyers now have to rent, rental costs have gone up in some areas. This means you can turn a profit by buying a low-cost foreclosed home and renting it out.
4. Don’t look for immediate returns on your investment. Real estate prices are likely to stay low for a long time. This is not the time to buy a house that you want to fix up to sell immediately. Look at buying a home that is likely to have resale value in ten or twenty years.
5. Buy in areas that are up-and-coming. The way of the future is in advanced computing, biomedical engineering and other high-tech fields. Consider purchasing an investment home in small cities that are getting off the ground in these areas. Cities in North Carolina and Texas are good examples.
6. Purchase a foreclosed home for your adult child. If you’re in the position to make this kind of offer then now is the time to do it. Home prices are low and you can give your adult kids a great way to start owning a property while making low payments that they can likely afford. Make sure the terms of your agreement with them are clear and in writing to avoid family financial battles down the line.
7. Get your credit report in order before you buy. It’s important to get a great mortgage loan especially with all of the foreclosure problems people are having. This is easiest to do if your credit report is as clean as can be. Order your report, fix any errors and pay off the debt that you can before you apply for a mortgage loan.
8. Work with a real estate agent who specializes in foreclosure sales. Choosing the right finance professionals is always a smart move! A seasoned real estate agent who has been doing well with sales during this foreclosure market is someone who can help you out. Although you can get good deals on other homes right now, buying a foreclosed property can allow you to get the lowest price in today’s market.
9. Look for a home that can easily be adapted for green savings. The cheapest home on the market isn’t always the one that has the best long-term value. Home buyers today definitely want to look for homes that have green features or can be easily and affordably adapted to be green. Proper natural landscaping, energy-efficient heating and cooling and other green options will keep costs of a home down over time. A slightly pricier home that already has these features or can be easily remodeled to include them is a home worth buying compared to a cheap home that will have high energy bills and water bills every month.
10. Do your research into buying a foreclosed home. There is a wealth of information on this topic these days since it’s something that we’ve been dealing with a lot in the past few years. You don’t need to go in blind. Do your research to make a smart foreclosure purchase.