What makes real estate foreclosure market so hot? You can buy foreclosure homes at staggeringly low prices and expect to earn huge revenues in less time and effort. Foreclosure homes are flooding the market because many homeowners are unable to pay their mortgage for varied reasons, including divorce, sickness, death in the family and unemployment. Mortgage lenders, either banks or the government, prefer to sell foreclosure properties in their portfolio and recover their investments. And what better way to dispose these properties immediately than by selling them at outrageously low prices.
Buying Government Foreclosures:
Government agencies such as the Department of Housing and Urban Development (HUD) and Department of Veterans Affairs (VA) act as insurers to allow eligible persons to buy a home. In the event that homeowners fail to pay their mortgage, lenders will inform the government agencies that in return will pay the mortgage loan balance to lenders. In return, the HUD or VA will take over the troubled properties. The agencies will then re-sell these properties immediately in an effort to recover their investments.
Buying Bank Foreclosures:
People who failed to pay their mortgage loans will find themselves face to face with foreclosures. Depending on the state's rules regarding foreclosure properties, the usual is three months after the first receipt of a notice of default for foreclosure action to proceed. You can either buy foreclosure houses at auctions or real estate owned.
At foreclosure auctions, you get a chance to bid on bank foreclosure homes. Properties that remained unsold after an auction are called real estate owned. This means that these houses are returned to banks that will immediately find quick ways to sell them in order to recover their investments. Also, it would not be good for the bank's image to have a long list of foreclosure houses in their portfolio. It reflect inefficiency on the part of the banks.
There are thousands of foreclosure properties on the market. So do not buy foreclosure homes as soon as you see one that took your fancy. It would not hurt to compare at least three foreclosure homes.