When buying a bank owned property, you need to consider equity. Equity refers to the value of the home that are not encumbered by a mortgage or other lien. Many REO home with instant equity because many properties are sold at below market value. For example, if you buy a Real Estate Owned home for $ 100,000 (and allocate $ 100,000 mortgage) but the house is worth $ 120,000, the home has $ 20,000 in equity. One of the reasons the bank owned properties that are attractive to consumers because they offer home equity.
Equity is something that you will want to actively seek the property you are buying. Equities do some things. First, it can reduce the interest rate on your home loan. This is why you often qualify larger down payment for a smaller mortgage payment or a better rate of interest. Secondly, equity can protect. If you need to borrow money for emergencies at one point or need to Refinance your home to make it more affordable mortgage, equity is something that you can borrow against. In addition, equity can help improve your credit score. The more you share your home, the better risk you are to lenders. If you need a loan at one point, there is a lot of equity in your home can help you get a loan.
When buying a repo home, looking for a home with lots of equity. To do this, you need to have an appraiser evaluate the market value of the property. Compare them with the asking price of the home and reduce the money you have to pay to repair the house. The result is the average amount of equity you can enjoy. Consider looking for a fixer upper bank owned property - the house is often a lower price and can mean more equity for you if you're willing to fix it.Thanks