Looking to purchase a new home but concerned that you won't be able to afford the monthly mortgage payment? Or perhaps you want to buy in a popular neighborhood but believe the homes are out of your price range. Buying a foreclosed home could be the answer. An abandoned home in Ontario is typically owned by a bank or lender. Lenders can foreclose on a home if homeowners fail to make their regular monthly mortgage payments, in which case they take ownership of the property.
Banks and mortgage lenders will then attempt to resell these homes, frequently at lower prices or with a smaller down payment. That is the primary advantage of purchasing a foreclosed home:
- Conduct research The Various Methods of Purchasing a Foreclosure
The first step in purchasing an abandoned house, as with any major purchase, is research. This is because there are several methods for purchasing a foreclosure, and the best method for you may differ depending on your needs.
- Purchasing From a Homeowner
A pre-foreclosure, also known as a short sale, occurs when the homeowner still owns the property but is aware of the possibility of foreclosure. Owners want to sell their house before it goes into foreclosure. As a result, short sales are not technically foreclosure sales.
- Purchasing at an Auction
The traditional method of purchasing a foreclosed home is through a real estate auction. Third-party trustees conduct auctions to sell homes that banks or lenders have taken ownership of after the original homeowners defaulted on their mortgage loans.
- Purchasing Government-Owned Real Estate
Government agencies take possession of a home after the owner defaults on federally insured mortgage loans.
2. Figure out the total budget of yours
When purchasing a foreclosed home, budgeting is essential. Yes, you might be able to get a better deal on your new home. To determine how much of a mortgage payment you can afford each month, create a household budget that includes your monthly income and expenses.
3. Hire An Experienced Real Estate Agent
If you decide to buy a foreclosure, you should look for an experienced real estate agent who has access to a local multiple listing service and is familiar with the local market.
4. Obtain a Mortgage Pre Approval
Getting preapproved for a mortgage is a wise decision regardless of the type of home you purchase. A lender will run your credit and verify your income and debts at no cost during the preapproval process. This lender will then determine how much of a mortgage you are eligible for.
5. Make a Competitive Purchase Offer
If the house is in pre-foreclosure, your real estate agent will need to present the offer to the current owner.
- Schedule a Home Inspection
Remember that you're purchasing a foreclosed home "as-is." This means that no one on the selling side (whether you're buying from a bank, lender, or government agency) will pay for any repairs that are required. It is your responsibility to make these repairs. As a result, you must inspect the property as part of the offer process.
