The price of foreclosed homes may help you decide whether to rent or buy at auctions.
Before making a buying decision though, you should consider a few pros and cons of auctions.
The choice between renting a home and buying one often comes down to the price of the homes in your area. Fortunately, the price of foreclosed homes may help you decide whether to rent or buy at auctions. Before making a buying decision though, you should consider a few pros and cons of auctions.
Buying a foreclosed home at auction can be a complicated process compared to buying a home purchase from a homeowner or through a real estate agent. The public foreclosure auction occurs as soon as the property is foreclosed. You are allowed to bid on these homes if you prove you can pay for them or pay a percentage of the overall price the day of the auction. Often, the lender who owns the property sets a minimum bid on the home so you must pay at least that much.
The risks of buying a home at auction include that the property may have extensive damage and may have liens on the title. Typically, you do not get a chance to have the home inspected before you bid on it. An additional risk is that in many states the former owner has the right of redemption, which means they get a specific amount of time to pay all the money owed on the home and take it back. If this happens, you will get the money you paid down back, but you loose the house.
Buying offers advantages over renting however. As a renter, your payments never amount to net worth, whereas as a homeowner, any payments made on the principal of the home build home equity. This means that each month you make a mortgage payment you build your investment. This investment can factor heavily in the decision you make whether to rent or buy at auctions.
While deciding whether to buy vs. rent your next home, you should look into financing options to determine just how much home you can afford. If you want to look at local foreclosed homes for sale in your area, enter a zip code above.