George L. Duarte - Mortgage Loans Fremont California Horizon Financial Associates

Pros And Cons Of Buying A Foreclosure When a homeowner stops making regular mortgage payments, the bank can foreclose on the property. This means that the bank takes possession of the property in an attempt to recover the debt the homeowner owes. In some cases, the bank may try to recover this debt by selling the property at auction. In other cases, the bank will simply list the foreclosed home for sale.

Choosing to purchase a foreclosed home has both advantages and disadvantages for the buyer. Weighing these advantages and disadvantages carefully is essential.

Pros of Buying a Foreclosure

When you decide to buy a foreclosure, you will be working with a seller that is inherently more motivated. The longer the bank owns the property, the more money they lose. For this reason, banks are often more willing to negotiate on all of the terms of the sale, including the price, closing costs and other important factors.

Buying a foreclosure also ensures that you are getting a house that is already vacant, so you can move in whenever you are ready. In addition, you can be sure that the title on the home is clear.

In most cases, you will be able to finance a bank-owned foreclosure with a mortgage, and you will be able to obtain an inspection if you want one.

Cons of Buying a Foreclosure

Buying a foreclosure also comes with disadvantages. For example, banks usually require additional paperwork when you are purchasing a foreclosed home.

In addition, most banks will refuse to complete any repairs on the home before the purchase. Most foreclosed homes are sold as-is, which means you may have to repair some problems or do some updates after you buy the home.

Finally, because the bank has only owned the home a short time, they cannot provide comprehensive disclosures related to the property’s current condition or history. This means that you may end up purchasing a home without being fully aware of the problems you’ll need to address.

Making a Choice

Buying a foreclosure isn’t the right option for every buyer. However, if you are a careful shopper, potential benefits are available.

Before making an offer on a foreclosed home, be sure to consult an experienced mortgage professional to get your pre-approval in order so you can complete the purchase quickly if you choose to move forward.

What’s Ahead For Mortgage Rates This Week – June 4th, 2018 Last week’s economic reports included readings on Case-Shiller home prices, pending home sales and construction spending. Weekly readings on mortgage rates and new jobless claims were released, along with monthly labor-related reports on job creation and the national unemployment rate.

Case-Shiller: Home Prices Maintain Rapid Growth

S&P Case-Shiller home price indices for March showed home prices continued to grow at blazing rates. Seattle, Washington held on to first place with a seasonally-adjusted annual rate of 13.00 percent; Las Vegas, Nevada reported 12.40 percent growth in home prices in March.

Analysts said Las Vegas markets benefitted from homebuyers relocating from high-priced coastal areas. Las Vegas home prices were 25 percent below their housing bubble peak. San Francisco reported year-over-year home price growth of 11.40 percent

Home prices were driven by short supplies of homes for sale and high demand among buyers, which led to bidding wars in high-demand areas. Rapidly rising home prices sideline first-time and moderate-income buyers who face hurdles of affordability and strict mortgage approval requirements.

While real estate pros and economic analysts expected home price growth to reach a tipping point where demand for homes would slow down, it hasn’t happened yet. Strong economic conditions and jobs data provided first-time buyers incentives to transition from renting to owning.

Pending Home Sales Slow in April

Pending home sales, which are sales under contract but not yet closed, dropped by -1.30 percent in April as compared to the March reading of 0.60 percent. Severe winter weather contributed to the lag, but analysts said severe shortages if available homes squeezed would-be buyers to the sidelines as they waited for more buying options. The National Association of Realtors® said that April’s reading was the third consecutive month of lower pending home sales.

Construction spending rose by 1.80 percent in April and surpassed expectations of a one percent increase and the negative March reading of -1.70 percent. This could be a hopeful sign if accelerated spending is due to growing construction projects, but ongoing concerns over increased materials and labor costs may have contributed to builders’ cash outlay.

Mortgage Rates, Weekly Jobless Claims Fall

Mortgage rates eased last week, with average rates lower across the board. Freddie Mac reported the rate for a 30-year fixed rate mortgage fell by 10 basis points to 4.56 percent. The average rate for a 15-year fixed rate mortgage was nine basis points lower at 4.06 percent; rates for 5/1 adjustable rate mortgages averaged 3.80 percent and were seven basis points lower. Discount points averaged 0.40 percent for fixed rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.

First-time jobless claims fell last week to 221,000 claims filed. Analysts expected 225,000 new claims filed based on the prior week’s reading of 234,000 new claims filed. May payroll reports supported stronger labor markets as ADP reported 178,000 jobs added as compared to 163,000 private-sector jobs added in April. Non-farm payrolls, which measure private and public-sector job growth, rose by 223,000 jobs in May as compared to 159,000 jobs added in April. The highlight of May labor reports was an 18-year low of 3.80 percent national unemployment rate for May.

What‘s Ahead

This week’s scheduled economic reports include readings on job openings, mortgage rates and new jobless claims.

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