Mortgage applications have sky rocketed this week up 48% to be exact. With falling interest rates and the Federal Reserve cutting the fed funds rate to almost 0% things are going to start to move.
If you have been thinking of jumping back into the housing market now might be the time. The combination of low rates and foreclosure deals everywhere you could be like a kid in a candy store.
Here are some tips when buying a foreclosure:
1. Consider paying cash...if you can. Some banks are requiring deals close within days. Right now that's not enough time to get a loan from the bank. Most banks are taking up to 60 days to process a mortgage loan. Especially, if you need to go with a Government loan like FHA or VA. A hard money loan might be an option in this case, but you could paying up to 15% in interest plus points and you probably won't be able to refinance for a while.
2. Perform due diligence. Check out that house before you buy! Foreclosures are usually old as is. You can have the property inspected before you bid. Three have been a lot of disgruntled former homeowners that were not happy to get their homes foreclosed on. I have seen cement and wax poured down drains, outlets completed taken out, as well as complete kitchens and bathrooms gutted. Even after you put down a deposit, you can change your mind and get your money back.
3. Get a licensed appraiser. It doesn't matter how much the lender has discounted the note; the only thing that matters is how much the house is really worth. This should be a no brainer, but if the house isn't worth what it's selling for don't buy it.
4. Go for a short sale. Instead of a foreclosure you could try a short sale. A short sale is a buyer selling a house for less than what they owe on their current home. You may able to negotiate quite a deal. This transaction involves you, the bank, and the homeowners. Typically before a foreclosure takes place. You have more time to arrange financing and since the owning bank may have less costs to recover you may be able to get a screaming deal.
You can check your local public NOD (notice of default) listing for prospects.
Get out there folks. Let's buy some homes.
[This post is written and copyrighted by Financial Elite (http://financialelite.blogspot.com/ ).]
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