6b. The importance of pre-qualification letters
6c. RESPA consumer protection
Read the full Chapter Six in one page
Once buyers ensure their credit is in order, the next step to take in the process of buying HUD homes is to qualify for financing. Most buyers cannot pay for government foreclosures in cash, which means they will need to qualify for financing. This chapter covers important information that buyers can use as they work on getting qualified for the financing needed to go forward in the HUD home buying process.
How Much Can Buyers Comfortably Afford?
Before looking more closely at the financing options available today, buyers need to consider the amount of money they can comfortably afford to bid on HUD homes. Although buyers may be able to qualify for a certain amount of money from lenders, this is not always the most important number to consider when purchasing government foreclosures.
Before buying cheap homes, every buyer needs to think about how much they can comfortably afford for a mortgage payment. Buyers that overestimate the amount they can comfortably and realistically afford can easily stretch their finances beyond their breaking point, which can result in financial disaster.
Once buyers decide on the amount they can afford comfortably, they can give their real estate agent a price cap to make sure they avoid looking at properties that are beyond their comfort zone in price. Only looking at the qualification numbers instead of considering the amount that can be afforded comfortably can quickly result in many problems. Buyers that begin to look at HUD homes priced beyond what they can comfortably afford may stretch their resources too thin, spending a larger portion of their monthly income on their home. This danger is what results in foreclosures in the first place.
Another problem buyers may face if they begin considering homes beyond the price they can comfortably afford is feeling like they are settling when they purchase the home. For instance, if buyers begin looking at higher priced homes, those homes offer better amenities and extras, which can make lower priced homes look pale in comparison. If buyers only look at homes in their price range, it enables them to feel more satisfied with their purchase in the end while avoiding a huge amount of financial stress.