McLEAN, Va. (7/10/12)--Average U.S. mortgage rates last week stayed at the lowest level since long-term mortgages began in the 1950s. The historic rates have helped with a modest housing recovery (USAToday.com
With myriad houses for sale, some options will be in foreclosure. You might be able to land a good deal by purchasing a foreclosed home, but money saved on home price isn't everything. If you're not careful, you could dish out more than you budgeted for in remodeling and home repairs. A foreclosure sale is very different from a regular house sale.
Take care if you're thinking about buying a foreclosed property:
Hire a good inspector. Just as you'd make the sale of a "regular" house conditional on a thorough home inspection, do the same with foreclosed properties. An inspection will cost several hundred dollars but is well worth it. Although the sale may be "as is," you'll learn what you're up against. If possible, be there to accompany the inspector.
Estimate repair costs. Use the inspector's written report to get accurate estimates from contractors bidding on major repair work. Once you know how much money you'll have to sink into repairs to bring the foreclosed house up to par, you'll be able to make an educated decision about whether buying a particular foreclosed house is worth it.
Be true to yourself. You might be handy, but be realistic about how much touch-up work you can manage. Even people with home improvement backgrounds could be taking on too much with foreclosed properties. Just having time to complete the needed work can be a deciding factor.
Find an agent specializing in foreclosures. Real estate agents specializing in foreclosures often have relationships with the lenders listing the properties. They also may know of listings that haven't been made public yet, according to Bankrate.com.
Get preapproved at your credit union. Whether you're purchasing a foreclosed home or another type of property, your credit union lender can help by approving you for financing in advance.
For more information, read "Know When to Buy a House" in the Home & Family Finance Resource Center