5 Tips for Avoiding Risky Real Estate Deals

Owning a home is a wonderful investment and experience for any individual. Since the desire of owning a home motivates most homeowners to buy, many people get themselves into deals that seem too good to be true. It is important to be careful and to avoid risky real estate deals that may actually do more harm than good. Here are 5 tips for avoiding risky real estate deals.

  1. Hard Cash Lenders. Stay away from hard cash lenders. Many lenders will offer potential homeowners hard card to allow them to finance a home. While you will get money and you will be able to finance, you will also end up paying astronomical interest rates and you may have to front collateral. To avoid this, save money up before buying a home so that you are not desperate and seeking quick ways to get money fast.
  2. Tax Credit. Say no to tax credit advance. Very often FHA approved owners will give eligible borrows advances on their tax credit to help them pay their tax credit. While it is tempting, easy money, it is best to stay away.
  3. Second Mortgage before First. FHA lenders will propose that they can put 3.5% of your initial down payment towards a second mortgage. While this sounds great, you must also know that this comes at a price and you will be stuck with high interest rates. Plus, it can become very difficult to juggle and manage two mortgages at once. To avoid this, it is best to wait before buying a home so you can save more ahead of time and avoid a situation of this sort.
  4. Loans from Unlicensed Lenders. Unlicensed lenders are popping up all over the place and they can be very dangerous for new homebuyers. They charge customers extra fees for things that should typically be free of charge. In addition, these rates are typically much higher than the state permits. Any time you are working with a lender, make sure to check that they are officially and legally licensed before proceeding with any loan agreement.
  5. Quick Switch Deals. Sometimes a new buyer will find out too late that their home was recently sold and therefore under FHA regulations, the buyer cannot purchase the house. FHA does not allow loans on properties that have changed hands in 90 days or less. If this is the case, the buyer who took out the loan will have to pay the loan money back to the FHA in full and will not be able to buy the house. To avoid this, make sure to check when the last sale of the home took place before signing any paperwork or making a serious offer.

Buying real estate is always a complicated, but worthwhile process. If you take the time to compare prices on HighPricePaid, research the quality of the property, and make smart financial decisions, you will be able to navigate the real estate market with flying colors. Keeping all of these helpful tips in mind during a real estate deal can help you to avoid dangerous situations, protect your assets, and make wise decisions.

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