Should I buy a foreclosed home to live in before we loose our home?
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Should I buy a foreclosed home to live in before we loose our home?
This question is for the Detroit Metro Area. My wife and I are both out of work; we have made all payments to our mortgage company in full and do not have any late payments. Our house has experienced a series decline in value and we owe more than its worth. Rather than continue to poor our savings into it and still loose it if we can’t find work. We thought it would make more since to use our liquid savings to purchase a foreclosed home in the area. If we found work it would be a rental, if not we would have some place to live. What if any are the caveats of this plan?
Asked on May 19, 2009 under Real Estate Law, Michigan
Answers:
B. B., Member, New Jersey Bar / FreeAdvice Contributing Attorney
Answered 15 years ago | Contributor
The big risk that I see in your plan is that if you lose your home, and it is sold after foreclosure for less than you owe, the lender could then sue you for the difference. If they win, they would have what is called a "deficiency judgment" -- and any judgment against you automatically becomes a lien on any other real estate that you own. You could end up losing two homes for the price of one.
A lot would depend, really, on the value of your home and the mortgage balance, and on the value of the kind of foreclosed property you would be looking at, its price and what it would cost to get it into shape (because many foreclosed properties have suffered months or even years of neglect) and what you might be able to rent it out for (and how quickly, depending on how much work it needs). A discussion of these details with a real estate attorney in your area would be an excellent investment, and one place you can look for a qualified lawyer is our website, http://attorneypages.com
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