Buy a home for $1000! Buy a home for pennies on the dollar! We all see those informercials about how you can buy a home for almost nothing!!! As a first time home buyer in the Greater New Milford Connecticut you need to understand the pitfalls of purchasing a foreclosure, and the reality of the situation.
First, I want to say I have yet to see anyone purchase a home for $1,000. Usually what this is referring to is a tax sale for back taxes owed to the town. And if you pay close attention to those, they rarely happen anyway. IF they do, there are some things you should know about properties that are sold by the state of Connecticut for back taxes.
- The owner has the right of redemption for a year. The deed is not recorded during this period of time and because of this it is unclear of who has the right to live on the property during the redemption period.
- Statute says the tax sale will wipe out the mortgage, however because of the way it is done, the lender may indeed come back and claim a constitutional right to defend their interest in the property.
- Some of our Title Companies in Connecticut refuse to insure title for these properties. If that happens, you cannot mortgage the property at a later date and will have a hard time to sell in the future.
These are only a few of the reasons why purchasing a home at a tax sale is probably a bad idea for the first time home buyer, or for any buyer who isn’t prepared to deal with the above. Save yourself the money, don’t purchase the book from the infomercial. We don’t buy properties on the court house steps here in Connecticut like they do in some other states.
Foreclosures are often the first thing that come to mind for buying your first home in the Greater New Milford Connecticut area. After you realize that you can’t buy a home for a $1000 that is. Yes, we have foreclosures, not as many as other areas. But that will change and we will see more and more.
Here is the cold hard truth about foreclosures in the Greater New Milford, CT area. Very few are in good shape. Oh sure, you might be handy, but most I have seen need work far beyond “handy”! Many have been vacant for a long time, they have had pipes freeze and break, they have water and mold issues, the septic is a HUGE unknown. (Inspections on septic systems at a home that has been vacant for a while are difficult at best, you won’t get a true understanding of the system’s functionality.) Remember, this is a rural area and most homes have a septic system, unless they are in the downtown area and connected to the town sewer and water lines!
For instance, you see a home listed for $80,000, what a bargain! Your heart races, you want to see it, this is your home, you can fix those little problems, you are handy! However the reality is IF you are going to purchase this home with a mortgage, you will have to have a special mortgage that requires you to use licensed contractors to fix the issues and pay them out of money you have borrowed from the lender you use. (for instance, 203K rehab loan, you can read all about the 203K rehab program here at the HUD website.) So, this $80,000 home will cost you far more, depending on the amount of work needed you may have to borrow the funds to bring the house up to a standard where you can actually live in it! And the lender will check to make sure the work was done by a licensed contractor, not by you! So the house that you thought you were going to get for $80,000 is now going to cost you far, far more! And the lender will not allow you to pay more for the repairs than for the original home itself.
Not to say that buying a foreclosure won’t or can’t happen, but be prepared. Get preapproved for a mortgage so you know how much you can spend, how much you are comfortable with. Find out what type of loan products are available to you. Once you know how much you can spend, more homes may open up to you as a possibility to purchase. Stay in touch with the real estate market, focusing on more than foreclosures in the area. And if you find a foreclosure you want, make sure you have it inspected by a good home inspector.
Call me at 203.460.1775, I would be happy to talk about buying a foreclosure in the Greater New Milford Connecticut area. You may not like what I have to tell you, but I will be up front, honest and will tell you what you need to hear, not what you want to hear, about purchasing your first home.
Originally posted at “I want to purchase one of those $1000 homes in New Milford CT”
c Andrea Swiedler 2011