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Buying a foreclosed home may seem very attractive to you as a homebuyer. However, there're many ways that a foreclosed home differs from buying a traditional buyer/seller home. Here are a few crucial points to consider.

Find the Right Agent

The first thing that you will want to do if you’re interested in buying a foreclosure home is find the right agent. They can help you find the right homes and guide you in dealing with the bank’s agent. Many times in foreclosures there’s only one agent representing the home. If that happens, you as the buyer will work directly with the bank’s broker in order to purchase the home.

Shop Mortgage Rates

Don’t think that just because you’re buying the home from a bank that the specific bank will finance your new home. Most likely, you’ll need to shop around for rates and find a dependable lender to help you finance the purchase of the home. Be prepared to finance your purchase.

Get Pre-approved

Many sellers won’t even consider an offer without a letter certifying that the buyer has been pre-approved. They go off the market quickly, so time is of the essence and most sellers are not willing to wait the extra time for you to get settled in with an excellent offer after the fact. Making sure you’re ready before you start the home search process is a good way to secure a purchase.

Be Prepared to Buy a Home “As-Is”

A foreclosed home is not one that can be negotiated on. Due to the nature of the transaction, the price is already considered low for the market. You’ll need to do a little research to find out how fast foreclosed homes in your particular market are selling. Depending on the conditions of the market, you may need to offer more than the asking price in order to secure the home. With a little research, you should be able to make an informed offer on a foreclosed property.

Be Prepared For Repairs

Since foreclosed homes aren’t really open for negotiations, any repairs that must be made to the home are your responsibility after purchase. You’ll need to have an understanding of what must be done in the home so that you can hire the proper people to make repairs. Not to mention that you’ll need some additional funds at your disposal to start and complete tricky or dense projects. Assume that if one thing needs to be repaired, one other item nearby needs to be fixed. This would include items like the heating and air conditioning systems, appliances and structural issues.

Open houses can be a great way to get to know a home and the neighborhood it sits in. Sure, the seller will be trying to put their best foot forward on the big day. But, you’ll still be able to get a chance to tour the home relatively uninterrupted.

But what should you look for in particular when attending an open house?

There are a number of things you can learn at an open house. Many prospective buyers spend the time looking at things like paint color and cosmetic touches that can easily be changed, and very little time considering important factors that should go into their home buying decision.

So, in today’s post, I’m going to cover some of the lesser known things you should be looking out for when you attend an open house. That way, you’ll know which houses are worth considering further and which ones should be left behind.

Not enough storage space

If you find yourself constantly running out of storage space (and who doesn’t?), you’ll want to make sure the home has ample space to store your belongings. If it doesn’t, see if you can find ways to repurpose areas for storage, such as spare bedrooms or garage space.

Overly scented areas

It’s perfectly normal for a seller’s agent to place one or two choice candles in the home during an open house.

However, if you notice some rooms have an overpowering smell of candles or air fresheners, there’s a good chance it’s there to mask offensive and hard to remove smells. Pet and cigarette odors are among the worst culprits.

The windows, doors, and cabinets should work like a dream

When attending an open house, take note of how well the doors open and close. If appropriate, ask the seller’s agent if you can try out the windows and cabinets as well.

Problems with these items can be signs of poor craftsmanship, cheap materials, or neglect.

Traffic and neighbors

If you’ve found what you think is the perfect home, it can be easy to see the world through rose-colored lenses.

However, it’s important to take them off when looking around the yard. Take note of the traffic level, and the amount of privacy the home receives. If you like the home, it’s also a good idea to stop by the neighborhood during rush house to gauge how traffic would affect your commute.

Air flow issues

Improper ventilation can lead to mold growth, especially in bathrooms and kitchens. Make sure bathroom vents and fans work properly, and check windows for condensation.

In rooms with sinks, check around the base of the sink and counter for signs of water damage or mold.

Large cracks in foundations or ceilings

While small, hairline cracks in the foundation of a home are completely normal, large ones can be dangerous.

They can allow water and pests to enter the home, causing all types of costly damages.

Keep those six tips in mind when you attend the open house, and be sure to bring a list of any other questions you might have for the seller’s agent.

If you’re hoping to buy your first home in the near future, you’re likely wondering about the different types of mortgages that you may qualify for. Since the 1930s, the Federal Housing Administration (FHA) has been insuring home loans for first-time homeowners across America.

This program helps people achieve homeownership who typically wouldn’t be able to afford the down payment or pass the credit score requirements to secure a traditional mortgage.

In today’s post, we’re going to answer some frequently asked questions about FHA loans to help you decide if this is the best option for your first home.

Does the FHA issue loans?

Although they’re called “FHA loans,” mortgages are not actually issued by the FHA. Rather, they’re issued by mortgage lenders across the country and insured by the FHA.

Will I have to make a down payment?

With an FHA loan, your down payment can be as low as 3.5%, significantly lower than traditional loans at 20% down payment. However, you will be required to pay private mortgage insurance (PMI) in addition to your monthly mortgage payments until you have paid off 20% of the home. So, the best case scenario would be to save as much as possible for a down payment to reduce the amount of mortgage insurance you have to pay.

What are the benefits of an FHA loan?

The three main reasons to secure an FHA loan are:

• You can qualify with a low credit score

• You can make a smaller down payment than traditional mortgages

• Your closer costs will be less expensive

Where do I apply for an FHA loan?

You can apply for an FHA loan through a mortgage lender. You can also work with a mortgage broker to help choose a lender.

Is an FHA loan the only loan option for low down payments?

There are multiple loan programs offered at the state and federal level to help individuals secure a mortgage with a lower down payment. They can be provided by the Department of Veterans Affairs, the USDA, or state-sponsored programs. Lenders also often sponsor their own programs to attract potential borrowers. However, always make sure you compare these programs to make sure you’re making the best long-term financial decision.

Do all FHA loans offer the same interest rates and costs?

No. Since the loans are only insured by the FHA, it’s up to the lender to determine your interest rate and fees. So, it’s a good idea to shop around for the best lender.

How high does my credit score have to be to qualify for an FHA loan?

You can secure a mortgage with a down payment as low as 3.5% with a credit score of 580 or higher. However, if you can afford to make a larger down payment, you can secure an FHA loan with a credit score as low as 500.

If your score is in the 500-600 range, it’s typically a better idea to spend a few months building credit before applying for a home loan.

What information will I need to apply?

You’ll need to gather all of the same information that you would for a typical mortgage. This includes W2s from your employer(s), two years of submitted tax forms, your current and former addresses from the past two years, and your gross monthly salary.

I’ve owned a house before, can I still qualify for FHA loans?

Even if you’re not a first-time homebuyer you can still qualify for an FHA loan. However, you cannot qualify if you’ve had a foreclosure within the last three years or have filed for bankruptcy within the last two years.