You might have to do a little work.
3. Some homes are ready to live in and some homes need work, but the latter usually offer a better deal if you're handy. If a home needs energy efficiency-related repairs (i.e. new roof, insulation), it may qualify for more than $6,000 in additional funds to make the repairs via a federal Energy Efficient Mortgage. The FHA 203K loan is another option; this program allows you to purchase the home and incorporate the cost of repairs into the loan amount.
Negotiate a one-year home warranty.
4. You want a warranty that specifically covers foreclosed properties and any undetected defects.
Be aware of current buyer incentives.
5. Some interest rates are below 5% today and many first-time buyers are eligible for an $8,000 federal tax credit, which you can file for this year as soon as you close on your home.
Act Fast, Great Deals Don't Last
6. Work with a lender to get pre-approved for a mortgage and interest rate so you can act as quickly as possible when you find a home.
Be realistic about the discount on foreclosures.
7. The perception that foreclosures offer good value is often true. Final sale price depends on the condition and location of the property, how long it has been on the market, and the number of interested buyers. With many active buyers, don't expect a big discount off the asking price.
Know what title you hold.
8. A Marketable Title is the best title to have as it ensures that all liens on the property have been released with a certificate of satisfaction. If you have an Insurable Title, it means that there are unreleased liens on the property. You are covered by the insurance, but should you sell or refinance the home, the unreleased liens will have to be properly recorded and may incur additional costs or even delay the transaction.
Know your rights
9. In Virginia, the bank is responsible for paying the Grantor's tax. In Washington, D.C., both the bank and buyer share the cost of the Grantor's tax; in Maryland the tax is paid 50/50 by the bank and the buyer.
Read the fine print.
10. Most banks draft and require buyers to sign an addendum. Read the fine print and understand what you are signing. For example, a bank addendum could contain language that makes the buyer liable for liens filed on the property after it goes under contract and before it closes. Be aware that contractors have 30-45 days to file a lien for non-payment of services rendered. So, a lien for work done before the contract was signed could still end up being the buyer's responsibility.
©2009 Coldwell Banker
