In the search for cheap houses, beware of buying a foreclosure with a second mortgage. Purchasing a foreclosure is a risky because the home may be in poor condition. Yet a foreclosure with two mortgages is even more complicated.
In the search for cheap houses, beware of buying a foreclosure with a second mortgage. Purchasing a foreclosure is a risky because the home may be in poor condition. Purchasing a foreclosure with two mortgages is even more complicated.
When you're browsing foreclosure listings in your area, you need to pay attention to the number of mortgages outstanding on the homes. If the listing doesn't provide that information, make sure you ask your agent about additional liens on any properties of interest. Unfortunately, if you inadvertently purchase a property with a second mortgage, it may be virtually worthless unless you can convince the homeowner to pay you instead of the bank.
In order to avoid this situation, always hire professionals to help you. A real estate agent or title clerk can research the property's title to ensure it does not have a second mortgage or lien. A real estate attorney can also do this research. Additionally, learn about the home's history, which you can do by visiting the county recorder's office. Become familiar with the auction process by observing a few auctions before you place a bid on a property. Finally, remember that the foreclosed property has no guarantees on the title or the condition of the house. If this seems like it's too much of a hassle, you may want to shift gears and look at bank-owned properties instead. Banks and other traditional lenders tend to clear the titles before they sell real estate owned (REO) properties.
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If you still want to buy foreclosed homes, enlist the help of a real estate agent who has experience with foreclosed homes. This agent will be better equipped to spot a scam. You should also study the prices of other homes in the area. If the price is so low that it seems too good to be true, it probably is. Also remember, when you buy a foreclosure, the property is sold in as is condition. You may end up with more repairs and renovations than you anticipated.
Despite these possible problems, you can find good deals on foreclosed homes. If you need to find a real estate agent, or want to look at foreclosed property listings, go to Reply!