New Homes vs. Foreclosure Part 2

Last week we talked a little about the truth about buying a foreclosure. I wanted to continue with same idea and post some additional items buyers tend not to consider when they are only price focused.

• “Foreclosures” and “Short Sales” do not offer special financing, which most builders are able to offer in house financing, and additional incentives saving you thousands of dollars.

When you purchase a foreclosure you are subject to the current market rate for lending, you cannot get a below market rate or other favorable terms. This is another factor when purchasing a foreclosure or short sale home. When you add up the price savings, and include the additional cost of financing and additional interest you could be paying more on your monthly payment, even though the purchase price was less. Costing you thousands of dollars over the life of your loan. Just because the price of the home is less, doesn’t mean it will cost you less…Buyer beware!

• The listing price of a foreclosure is not necessarily the price the home is going to be sold at!

Many times Agents will market short sales far below the accepted price from the banks, to ensure lots of activity and eventually drive the price higher than it was originally listed.

• Foreclosures always require a down-payment

With a foreclosure you always need to put at least 3.5% to 20% for a down-payment. New homes still offer many options of 0 down payment.

We will be following this up with yet more reasons to buy new, and avoid a potential problem with buying a foreclosure.