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Safeguarding Your Investment in Foreclosure Homes
Many people are jumping in the bandwagon of buying foreclosure homes without a safety net and they end up with a burdensome mortgage on a run down property. The best way to secure your investment in distressed homes is to arm yourself with good research and timely information to make the right choices.
There are indeed some important choices to be made when talking about buying foreclosure homes. You should start with the choice of payment method, which can either be in cash or through a home loan. Whatever method will be used, the buyer should establish a budget and stick to it. They should also know all the expenses involved in purchasing a foreclosure because it is never just limited to the purchase cost.
Incidental Costs of Buying Foreclosure Homes
Remember that distressed properties are all pre-owned and sold as is. There is also a real possibility that the former owners have not been able to take good care of the property. Your budget should include the amount to be spent repairing the home and nursing it back to livability. Home inspection is a definite expense because this is the only way you can assess the true state of the home as far as damages and wear and tear is concerned.
There is also the issue of the title search, which is another potential expense. If you purchase bank-owned foreclosures then this should not be a problem since banks will typically offer a title insurance. Otherwise you need to enlist the help of a real estate agent or broker or even a lawyer to conduct a title search on your behalf. This exercise will reveal all the back taxes, liens and other encumbrances which may still be in effect on the foreclosure homes you are considering.
If you are intent on making this investment, you have to be willing to conduct your research and sharpen your negotiation skills to arrive at the best deal possible.
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Mortgage Acceleration Can Be a Strategic Investment
Paying off your house quicker than originally planned is definitely a good idea. But if you think of your home as a way to increase your wealth, that is even better.
Owning a home automatically creates a form of savings for you, but owning a home and using the equity to increase your wealth is a better idea. It is not hard to do. And though it can result in the same advantages that a professional investor has, you do not need to know the complicated strategies they do. It just takes the following two steps.
1. Use the equity you already have in your home to work in your favor. You can use it to pay down the principle of your first mortgage, which accrues on a daily basis, and then get it back into your equity loan before interest accrues on it. This will do two things, drastically reduce the amount of interest you would pay on your home, and also significantly decrease the time it would take you to get out of debt.
2. After using a method like this to substantially reduce the time it takes to pay off your mortgage, you can then have whatever time is left to put into some account that bears interest for you, instead. It takes the money you would have used to pay off your house-and would have only made money for your bank-and puts it into your savings account.
When you think in these terms, you not only avoid paying large amounts of interest to the banks, but you can also begin to use your money (much sooner than you would have originally) to begin earning compound interest in your favor. This is the business the banks are in, and they provide the tools you need to do the very same things. That’s their business! And you can have the same advantages.