I know it is enticing .... however beware of buying a foreclosure "Bargain"

It’s an unfortunate result of the recession — many families haven’t been able to keep up with their

mortgage payments and have lost their homes to foreclosure. And foreclosed homes often sell for less-than-market rates, making them seem like a bargain to buyers who are used to the inflated prices of a few years ago.

But comparing a new home to a foreclosure on price alone is a mistake. You can’t put a dollar value on your peace of mind, safety, financial reserves and time — all of which could be in jeopardy if you buy a foreclosed home.


For example, a foreclosure could have legal issues. Before buying a foreclosed home you will have to do thorough research — or hire a title company or lawyer — to make sure there aren’t any additional financial or legal liabilities attached to the home. There may be liens on the property for unpaid taxes, home owners’ association dues, or the home may have been put up as collateral on other loans that weren’t paid. You could become liable for thousands of dollars of debt you weren’t aware were attached to the foreclosed home.

As soon as you take ownership of a foreclosed home, anything that breaks or any problems that arise are your responsibility. This could cost you lots of time and money that you may not have budgeted for.

With a new home, maintenance won’t be an issue for a while with the brand-new appliances and systems. And if something does go wrong in the first year, there is often a new home warranty that guarantees repair or replacement.  

Foreclosed homes also often haven’t been taken care of by former owners who knew they were going to lose the home. In some cases vandals, thieves or even the owners have damaged the home, removed appliances or torn apart walls to remove copper pipes that are valuable as scrap metal.

A foreclosed home could have been sitting vacant for months or years, and if it wasn’t properly secured, there could be significant damage from water, mold, weather or pest infestations. It could cost you thousands of dollars and a lot of time to bring a home that was allowed to deteriorate back to a livable condition.

You also don’t have to spend time or money changing someone else’s design preferences with a new home. No tearing down wood paneling, repainting walls, or replacing outdated flooring. Your preferences are included as the home is built, and they are there waiting for you the day you unpack your boxes.

Finally — and most importantly — don’t forget safety.
New homes have been constructed under a strict set of codes and standards, and have to be thoroughly inspected before the certificate of occupancy is issued and you are allowed to close the sale and move in.

With a foreclosure, you don’t know how many renovations or repairs have been made over the years, or who made them. There could be faulty wiring, weakened structures or other conditions that could be dangerous and costly to bring up to safe and modern standards.

When you are looking for a place to keep your family safe and to build a lifetime of memories, it may be well worth paying a higher upfront cost to get convenience, modern features and peace of mind — and avoid the potential pitfalls of a foreclosure that could turn your dreams of homeownership into a
nightmare.

Women's History Month (March 2010) - Financial Secrets from Mellody Hobson ... and it includes buying shoes ....

Her Secrets
Act like a Depression Baby: When the household bills arrive, like her phone or cable, Hobson pays more than what's due, so she won't get another bill for a while. "It may be ridiculous, but I sleep better if I'm prepared for the worst-case scenario," she says.

Aspire to ownership: Hobson takes part of her pay in company stock and saves more with each raise. "I know these days there's a big move to diversify your investments — but if you think you work for a good business that has wonderful prospects, put some of your money there," she advises. "The wealthiest families didn't get there on paychecks alone, but by owning all or part of their companies."

Splurge on something practical: Hobson admits she has too many leather blazers. But in the "very tailored" banking world, she explains, it's how she shows her personality yet stays "acceptable."

Get your $$$ worth: Hobson won't spend on "consumables." This means she avoids pricey restaurants but will splurge on her home and clothes. "I'd rather be sitting on it or wearing it than eating it

As president of Ariel Investments, Mellody is responsible for firm-wide management and strategic planning, overseeing all operations of Ariel’s business outside of research and portfolio management. Additionally, she serves as chairman of the board of trustees for Ariel Investment Trust. Mellody has become a nationally recognized voice on financial literacy and investor education. She is a regular financial contributor on ABC’s Good Morning America, a featured columnist in Black Enterprise magazine as well as a spokesperson for both the annual Ariel/Schwab Black Investor Survey and the 2009 Ariel/Hewitt study, “401(k) Plans in Living Color.” Beyond her work at Ariel, Mellody is a director of three public companies: DreamWorks Animation SKG, Inc.; The Estée Lauder Companies Inc. and Starbucks Corporation. She also serves on the Investment Company Institute’s board of governors and the SEC Investor Advisory Committee, and is a director of various professional and civic organizations. Mellody earned her undergraduate degree from Princeton’s Woodrow Wilson School of International Relations and Public Policy and is a former trustee of the University.

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