Thoughts On Finance

Many people are looking into buying foreclosures, and the truth is this is probably a good investment if you can afford to do so. It is an excellent time to buy into the housing market and consider owning real estate for the purpose of turning a profit, but you must be able to truly afford this type of investment. There are some real hard facts that you must consider.

1. When buying a foreclosed property, you don’t get a lot of the information about the information about the property that you might receive during a traditional home purchase, and this can put you at a disadvantage, if you only have enough capital to take over the home, but don’t have enough capital to invest in repairing the property. Many foreclosed properties require major work and although you may be one of the lucky ones who gets a property that is in excellent condition this should not be counted on.

2.  If you are considering buying a foreclosed home, make sure that you can afford to pay the taxes on the property.  Just because you get a good deal on the property itself, does not mean that you can afford to hang on to it.

3.  Make sure that you are not spending money that you will need back right away.  It is important to realize that with this uncertain market, that although you can definitely make a profit on a foreclosure it may be a little while before you can turn the best profit.  This is why you need to think of buying a foreclosure as a long term investment, unlike real estate investments of the past, when you could quickly turn over homes for profit.

The important thing to remember is that foreclosures are an excellent opportunity to make a profit, but make sure that you can afford to buy one before you do.

Honestly, when I first heard that a family who had a home built for them by the popular TV show, Extreme Makeover Home Edition, was having their house foreclosed on I honestly thought, wow what a waste. I mean you get a customized home built for you for free, and then you wind up having this home foreclosed on. Well, I heard an interview with the husband and wife who are living in the home and it changed my mind. They did have a beautiful home built for them, when they received the home, they were also given a $100,000 home maintenance fund but they did still have to pay the mortgage, which was the equivalent of what they were paying before the makeover and the taxes, which stayed the same for the first few years and then went up. This couple said that the home itself was costing them $6000 per month to keep up, and in addition to that they have a large family which also included some children with special needs, they didn’t really get into the special needs of each child. In any case, these people said that in addition to almost losing their home and being in financial ruin which is difficult enough, that they were receiving hate mail and threatening letters from viewers of the show who were angered to hear that they might be losing the home the show gave them. Honestly, I learned some things about home ownership in watching this show. I didn’t realize that there is something called a homestead protection, which says that if you own a home the only person who can sell that home out from under you is the mortgage company, however, once you take out a home equity loan, even if it is just for a very small amount, then they can come and sell your home out from under you if you don’t pay back the loan. For instance let’s say you borrow $10,000 dollars off your home, but your home is worth $500,000 if you don’t pay that loan, then that company can come and sell that home right out from under you to get back their $10,000. I didn’t really realize that it worked like that. In any case, these people did borrow money off their Extreme Makeover home, but it was really to put their kids in a rehab program and to start a new business. They didn’t just go out and blow the money and lose the home as some reports might make you think. This just goes to show that anyone can have their finances spiral out of control, it just takes a few mistakes and you can very easily find yourself in a hole without a shovel.