Teachers for the most part have job security. Yes, times have been tough lately, but tenured teachers have job security, consistent paycheck with raises, and a good retirement system. That makes teachers a good risk for a home loan. But because the economy is bad, there are thousands of foreclosed homes one the market. Should a teacher buy a new home or a foreclosure?
Buying a foreclosed home sounds like a great deal. You get a much bigger and fancier home for a lot less money than buying new. That alone draws many people, not just teachers, to buying a foreclosed home. But beware. You may need to seriously think about what problems buying a foreclosed home can bring.
Right off the top, here is what is great about buying a new home that teachers should consider. The home will be brand new. It will come with a warranty. The builder will probably offer customization aspects at a cheaper price than what they were a couple of years ago. No work needs to be done. You just move in. Remember that new homes must follow new rules for being energy efficient, and are made with the latest building materials. Homebuilders are building cheaper homes now. But many times it is the same product, or just a little downsized. Mortgage interest rates are still low. Nothing can beat the feeling of a brand new home.
But, isn't a foreclosed home much cheaper? Can't I get a bargain for a huge home that I could not get with a new one? Perhaps. It does not always work out that way. The cheap home can become expensive. Teachers work hard for their money. No reason to rush into a cheap foreclosed home just because it's cheap. Cheap is a relative word, especially with foreclosures.
A foreclosed home may be bought as is. That means no warranty and probably a laundry list of fixer upper tasks to complete. What are some more potential problems for a teacher looking to buy a foreclosed home? Here are some more reasons to stay away from a foreclosed home.
The house is dirty and probably not very inhabitable without a lot of work.
You alone are responsible for the work that needs to be done.
Fixing up a house is not cheap. Weigh the cost and time it will take to fix up the house to what a new one would be. Don't forget the inconvenience of living in a home that is being worked on.
It may not happen often, but you may need to worry about a backlash from the previous homeowner. Who knows? Sometimes you will be buying the home while the people are still living in it.
What kind of neighborhood is the foreclosure in? If there are many, it may take years before the neighborhood comes back along with the home prices.
If you are going to have to pay for paint, carpet, cabinets, bathroom fixtures, kitchen appliances and more, why not let the builder do it and get exactly what you want, brand new?
When calculating the true cost of a home, the purchase price is not all you will be liable for on a foreclosure. Teachers should be prepared to sink a lot of money to fix it up to livable condition.
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