Even though the prices of real estate properties in New York are rising steadily, it is still possible for an average American to achieve the dream of homeownership by opting for ‘pre-foreclosed homes. Homes in pre-foreclosure are accessible at much lower rates than their actual market value. So, if you are looking to buy a property at affordable rates, a home in pre-foreclosure can be a good financial deal for you. However, a realistic approach is necessary to make a financially sound decision.
Most people get confused between ‘foreclosure’ and ‘pre-foreclosure’. Well, there’s a thin line between the two. Foreclosure means a legal procedure that occurs when a borrower fails to repay the loan amount to the lender. The lender either sells the home in a property auction or takes complete possession of it. Whereas, a pre-foreclosure ensues when a homeowner falls behind on mortgage payments.
Generally, the pre-foreclosure period starts when the homeowner misses three consecutive payments and the lender issues a default notice to the home buyer asking to pay the debt. During this grace period, the property owner has two options, either he/she has to pay the debt within a specified time frame or sell the property. Therefore, pre-foreclosure can be considered as the initial stage that might lead to foreclosure.
Is it worth buying a Home in Pre-Foreclosure?
There’s a common misconception among most Americans that pre-foreclosure properties are only available in distressed conditions and in undesired neighborhoods. Well, pre-foreclosure has nothing to do with the locality and its condition. For instance, a businessman invests in a real estate property located in a posh area of NY and unfortunately suffers a huge loss in business that leads to the failure of the mortgage payment. Regardless of the fact that he’s a businessman the property is bound to enter the pre-foreclosure phase.
To be honest, financial setbacks can happen to anyone. Homeowners who go through such hardships usually prefer to sell their properties even at discounted rates. Otherwise, the property will completely slip off their hands and fall prey to the foreclosure process. So, you can actually get a good deal by investing in pre-foreclosed property.
Types of Foreclosure Sale
Benefits of Buying a Pre-Foreclosure Property
Here are the major benefits of buying a pre-foreclosure property.
- Less Competition: Competition is less since most properties are not listed.
- Quick Buying Process: Simple and quick home buying process as most homeowners are desperate to sell the property as early as possible to avoid foreclosure.
- Great Deals: You can negotiate and buy the property for less than its current market rate.
- Better Neighborhood: Chances of getting property in a better neighborhood.
How to Buy a Pre-Foreclosure Home?
Here we’ll discuss how to buy a pre-foreclosed property.
Find Pre-Foreclosure Leads
First and foremost you need to find legitimate pre-foreclosure leads. It might be a daunting task as most pre-foreclosure properties are not listed. So, roll up your sleeves and start by preparing a list of areas where you want to have a home. Once it’s done, you can make an analysis by reviewing public records or local newspapers and then visit those areas personally to find out about pre-foreclosed homes. This will give you a fair chance to check on the property as well as the neighborhood. However, if you want to simplify this process, we suggest you hire a ‘we buy houses for cash company.
Research the Neighborhoods
Shifting to a new home is a long-term commitment. Therefore, a good neighborhood is equally important as the home you want to move in is. So, do research about the neighborhood without fail. Look out for nearby schools, hospitals, banks, and transportation facilities to avoid problems in the future. In addition to this, you should also closely inspect the condition of surrounding homes and buildings.
Find an Authentic Lender for Receiving a Pre-approval Letter
Finding an authentic lender is one of the trickiest aspects of buying pre-foreclosed homes. What happens is, that you may want to buy a hot property worth $500,000 but, the lender may approve only $300,000. To avoid such unfortunate events, getting a pre-approval letter from the lender is necessary.
A pre-approval letter is basically a legal document that helps you understand your maximum borrowing amount. The precise amount is calculated on the basis of your gross monthly income and debt payments. Therefore, you can actually decide your budget only after getting a pre-approval letter from the lender. Apart from that, it’ll also depict that you are qualified for buying the property.
Important Documents You’ll Need
You must possess the following documents in order to get the pre-approval letter in a hassle-free way.
- Driving license
- Credit report
- Two pay stubs that reflect year-to-date earnings
- Two years of tax return report
- Recent bank statements
Sometimes, you might need to submit some other official documents. So, it’s always better to consult a real estate agent in NY to understand everything in detail.
Decide on a Property
Of all the pre-foreclosed homes that you’ve seen, you must narrow down your search to a few homes. Visit each of them personally and do an inspection. You can also hire a trustworthy home inspection officer to ensure the right decision. This procedure will hardly take a couple of hours. Monitor everything minutely including the electrical system and plumbing. Then, choose the one that fits your budget and has the desired amenities.
Make an Offer
Making an offer is easy once you have a pre-approval letter in your hand. You’ll know your financing options, and thus, you can outline the budget accordingly. Contact your real estate agent in New York and discuss how much you are willing to pay for the pre-foreclosed property. Your real estate agent will take your proposal to the seller. If your seller accepts your offer, then you’ll need to make a purchase contract.
Financing commitment is a crucial step. To get the specified loan amount you’ll have to send the purchase contract to the lender. The lender will examine the contract and ask you for the following set of documents before issuing a commitment.
- Mortgage application
- Property details
- A complete list of assets and liabilities
- Property Appraisal
- Application fee (May differ from individual to individual)
You can close the deal smoothly by following the above legalities.
Buying a pre-foreclosure property is not just a safe financial investment but also an opportunity to have homeownership in New York. Be patient and refer to the above guidelines to understand the technicalities of buying a pre-foreclosed home. Further, you can also contact ‘Elite Properties’, which is one of the most trustworthy real estate companies in NY for more experienced advice.
Are you planning to buy a home for the first time or are you among First-Time Home Buyers? Well, that’s undoubtedly a smart financial move. However, you may have to face certain challenges such as finding the right location or financing your purchase during the initial phase.
So, before you take a step ahead in achieving your American dream of homeownership, you should gain some practical knowledge of investing in real estate. It will help you get a bird’s eye view of the current market situation, ensure you won’t end in smoke, and make your abode journey easier.
Considerations Before You Take the Plunge
Here are some basic yet important questions you need to answer before proceeding. They will positively help you navigate in the right direction.
1. What Kind of Property Will Meet Your Needs?
Buying a home for the first time can be a test of your patience and forbearance. Don’t get us wrong, but finding a home that meets your needs is actually not a cinch. It’s better you start the journey by making a list of all the features/amenities you expect in your dream home.
Let’s say your goal is to have a spacious home located in the central area of NY with a small backyard. Then, you can either opt for brownstones or townhouses. If you want a cost-effective property with low maintenance, walk-up housing, which is the most common housing in New York, would serve your purpose. You have to figure out things according to your preferences and standard of living.
2. Do you qualify for the Mortgage You Expect?
During the home-buying process, it’s crucial for you to know how much mortgage you qualify for. You may plan to buy a home with a net worth of $450,000. However, the lender may not provide more than $250,000. Why?
The lender will analyze certain factors such as your total income, job security, and outstanding debts prior to assigning you the capital. They’ll directly say no if your debt-to-income ratio depicts that you’ll not be able to afford the mortgage payments. So, it’s a wise step to calculate your credit before applying for a mortgage loan.
3. Do You Have a Trusted Source Who’ll Guide You throughout the Process?
As we mentioned earlier, buying a home can be a daunting task. A trusted source can prove to be a boon for a first-time house buyer because no matter how much groundwork you do, there will always be something where you’ll feel the need of seeking professional help. A real estate agent can provide you with a number of options that match your expectations and are within your reach in terms of the price range. In addition to that, they can also help you get a loan, complete the paperwork legalities, and streamline the process. Therefore, you must contact an experienced real estate agent in NY to make your transition a hassle-free one.
Home Buying Process
Here are the five significant steps that can demystify the entire home-buying procedure.
1. Pick the Right Type of House
Contradictory to the common mindset, there are a plethora of affordable real estate properties for sale in NYC. Make sure to do thorough research on such properties, online as well as by paying a personal visit.
First, check out the houses on the internet by exploring the property listing pages of top real estate companies in NY. This way, you’ll get the description of available houses including their high-quality images.
Once you’re done, choose the top 10 or top 5 houses of your choice and contact the real estate agent for further details. Sort out the best property and move on to the next step for fulfilling your desire.
2. Explore Your Secure Financing Options
Assistance programs that offer low down payments and discounted interest rates for first-time buyers are available across different states of NY. Therefore, you must discuss the different types of mortgages with your real estate agent. Investing your time in exploring secure financial options may seem like a mentally draining process but, it will surely pay off in the long run.
3. Make an Offer
Many people get confused during the negotiation and end up frustrated. To avoid such situations, talk turkey to the real estate agent and decide a final price that you can offer for the property. Your real estate agent will then proceed and keep your proposal to the seller.
4. Consider Doing a Home Inspection
Once the seller agrees to your proposal, consider doing a home inspection by personally visiting the house. You can also hire a professional home inspector to save yourself from any kind of pitfalls. If you find something major that needs to be repaired, ask your seller to either do the needful or deduct the price from the final offer. First-Time Home Buyers should be very careful with this.
5. Close the Deal
You’ll need to sign a ton of legal papers while closing the deal. Carefully read the ‘legal jargon papers’; if everything falls into place, go ahead and sign the agreement to seal the deal.
Mistakes to Avoid as First-Time Buyer
Buying a home for the first time is indeed very special. Even the slightest mistake while buying a home can result in failure. To verify the following things first and then take a decision.
1. Looking for Home First and Loan Afterwards
This is the most common mistake that first-time buyers do and regret later. As a first-time home buyer, you need to keep in mind that the property might fall into foreclosure or short sales if you fail to repay the loan within the specified period. So instead of daydreaming about the home, face the practical world by visiting a lender’s office first.
2. Not Paying Attention during Home Inspection
All that glitters is not gold. Therefore, paying undivided attention during the home inspection is necessary. Make sure you access everything including the drainage system, roofing, plumbing, and electrical wiring.
3. Fraudster Alert
Don’t fall into the honey trap of fraud sellers who offer you unbelievable deals. The modus operandi of fraudsters is to take advantage of your ignorance. Stay cautious and understand all the clauses while you sign the agreement. The best way to avoid real estate fraud for First-Time Home Buyers is to seek professional help. It will significantly minimize real estate-related risks.
The Bottom Line
In a nutshell, the more informed you are beforehand, the less stressful you’ll feel during the decision-making process for First-Time Home Buyers. Do follow these tips sincerely and we’re sure you’ll get your dream house in New York soon!
There are times when it becomes difficult to take any decision especially when it comes to real estate affairs. Deciding whether to buy a remodeled homes, or a new one is definitely a time-consuming and challenging task for a first-time buyer as both have their pros and cons. Since buying a real estate property is a long-term commitment; you shouldn’t take it lightly and gain apt information regarding the laws, finance, and practical aspects before proceeding.
While we comprehend the appeal of investing in a new property, buying a renovated house might just be the wise decision you’ll make. To make your real estate journey a hassle-free experience, here’s an important question you need to ask yourself.
Does Remodeled House in NY Make Sense for Your Needs?
If we keep aside the real estate technicalities, one major issue that might arise during the decision-making process is budget: Is it convenient to buy a remodeled house as a first-time buyer? The answer to this question will depend on your financial planning and your family’s needs. First, you need to contact an experienced real estate agent and discuss all your concerns in detail. The real estate agent will show you the renovated house for sale according to your needs and if you feel satisfied with the features of the remodeled home; you can go one step ahead and do an analysis of the remodeled house price with respect to its current condition and location.
To find out remodeling house estimated costs, consider visiting the neighbors. You can inquire regarding the newly remodeled houses for rent as well as sale in the locality. It will give you a rough idea in reference to the house prices in that area. In addition to that, just speak to your real estate expert about the additional hidden costs and precise tax rate which you will need to pay for buying a remodeled home. This step-by-step procedure will definitely help you overcome the decision-making dilemma.
Advantages of Having Remodeled House
It’s always good to take calculated risks while investing in real estate. We are sharing the top benefits of investing in a move-in-ready property to help you take a crystal clear decision.
1. Significant Money-Saving
The prices of real estate properties in NY are at an unswerving high. However, remodeled houses are considerably cheaper than newly built ones. According to our recent survey, the investment in new real-estate property could cost you 20% to 30% more in comparison with a remodeled home in NY. So, as a first-time buyer buying a remodeled home can be a smart financial move.
2. Better Neighborhood
Existing homes are generally near downtown areas, more often in a centralized location, unlike new homes which are mostly built in exurbia. So, you won’t have to face any problems with commuting and have easy access to local markets, hospitals, banks, educational institutions, and your workplace.
Another advantage that you get with a remodeled home is an established neighborhood. Having a decent neighborhood is imperative as moving to a house is a long-term commitment. Apart from that, it is necessary from the point of view of safety and security too. So, that’s a huge advantage that shouldn’t be overlooked.
3. Upgrade to a Larger Space
Remodeled homes are much more spacious than the houses that we see in metropolitan cities today. In addition to that, you can also add a second story to increase the house per square footage. However, the rationale for a remodeled property in NY may vary from locality to locality. Be sure to research regarding the codes and laws in the locality where you intend to buy a remodeled house.
Choosing an experienced real estate salesperson could play a vital role in such cases. They can help you with the most authentic information about your neighborhood. Once you are aware of the local zoning laws, it becomes easier for you to take a decision.
4. Less Paperwork and Legalities
Legal paperwork and documentation are crucial parts of selling and buying a real estate property. In the case of a remodeled house, you won’t have to redo the entire documentation work. You’ll just need to change the personal details on the original documents and pay the required transfer and re-registration fees. Furthermore, mortgage frauds are much more evident in New York City nowadays.
Many unscrupulous house owners who’ve purchased a new property but failed to pay the mortgage loan may sell you their foreclosed or distressed property. However, when you buy a remodeled house, such risk won’t be there. But as a first-time buyer, you should scrutinize the documents properly to avoid such scams.
5. Retain Repairing Costs
Renovated homes can easily stand the litmus test of time aesthetically as well as structurally for a long period. Even if something needs to be fixed, you don’t have to worry about the repair credit. It would entirely fall into the realm of responsibility of the seller for a substantial amount of time. It could be between 10 to 20 years. Just make sure to discuss the ‘home warranty’ clause with the seller prior to signing the home agreement.
However, the renovation process consumes a noticeable amount of time, and the probability of getting a remodeled house in NYC at your convenience isn’t always facile. There might be several elements that you would like to implement in the remodeled home before stepping in. For example, the old stone foundations, sinks, or chimneys might require tuckpointing, and for that, you will have to keep patience until the home which you aim to buy gets completely ready. On average, the renovation process might take several weeks or even months. You can hire ‘we buy houses for cash company in NY to avoid such complications and have a hassle-free transition. In addition to that, they can also help if you have an unused property that you want to renovate and sell fast.
As per our current data & statistics, nearly 60% to 70% of remodeled homes in NY are yet to be sold. To reap a rewarding experience, you can take guidance from a reputed ‘we buy houses for cash company in NY. You can visit their website and check the property listing of available remodeled homes along with a detailed description and images. Once you like a property, you can contact the company’s representative for a detailed quotation. Don’t hesitate to negotiate the price and choose the best one which meets your need.
All the above-mentioned advantages give a leading edge to the renovated house/remodeled homes in the new-versus-renovated home battle. We suggest you settle upon a trust-worthy real estate company and do a realistic assessment of the renovated home for sale if the scenario is that the remodeled house is available in a much lesser price range, you can buy remodeled home in NY straight away.