Just think about how much you can upgrade your lifestyle in a home. Most likely, a free-standing home will provide more privacy and quieter surroundings if you’re in school, have a baby in the family, or just want an escape from the noise that comes from sharing walls with your neighbors. You’re also much more likely to have enough space to host overnight guests, have a fenced-in backyard for a pet, etc.

In your own home, you can make all kinds of improvements that you can’t make when you rent. Not ready to live in a home alone? You can still have a roommate, and that person can pay you rent that you can put toward your home improvements or your monthly mortgage payments. In this scenario, someone else is helping you invest in your economic future, instead of the other way around.

Speaking of home improvements, a great thing about buying an REO home is that you can apply for FHA financing that includes the cost of the home and any repairs that may be needed. This allows you to take advantage of the incredible deals you can get when purchasing a fixer-upper without having to worry about how you’re going to pay for repairs. This type of FHA loan is called a  Section 203(k) loan, the amount of which is based on the projected value of the home after repairs. And with a newly renovated home, you often get new warranties on things that needed to be upgraded.

If you’re a first-time home buyer, and especially if you’re paying for a college tuition, you may not have the money to make a hefty down payment on your own. With an FHA loan, you’re allowed to use money that’s given to you as a gift for your down payment. Plus, the down payment required on an FHA loan is usually less than what is required for a conventional loan. If you’re a first-time home buyer, you can also benefit from a government tax credit of $8,000 if you purchase a home as your principle residence prior to December 1, 2009.

Think you don’t have time to participate in an REO home auction? Today, even the busiest of people can benefit from the kinds of bargains only found at auctions. That’s because you no longer have to drive to an auction and spend an afternoon or an entire day bidding on a home. You can bid on properties and even see what others are bidding for those same properties on real estate auction websites like GoHoming.com.

Making regular monthly payments on a home that’s in your name is a great way to build your credit. And with great deals on REO homes, many people can afford to purchase homes now who otherwise could not have afforded it.  So, if you’re paying rent every month on a home that will never truly be yours, consider looking into REO homes. When you do, you’ll be pleasantly surprised by what you find, and you can rest easy knowing that you’re taking steps toward saving money, upgrading your lifestyle, and investing in your future.

During the auction, the minimum bid must include the amount of the outstanding loan, the accrued interest, attorney fees, and any other costs associated with the foreclosure sale. The lender sells the foreclosed home “as is,” which means that someone could still be living in the home, and the buyer would be responsible for making sure they evacuate the property. There could also be third-party liens for which the new buyer would assume responsibility.

A benefit to buying a foreclosure home is that the lenders will usually offer easy financing, and if the home is in very poor condition, they may accept a very low bid price just to get the property off their hands. Foreclosure sales are of best interest to investors, because they often come with existing tenants (the previous owners who defaulted on the loan) who usually wish to remain in the home. This way, an investor can purchase the home and be guaranteed to have renters right away.

Because the amount owed to the lender is usually more than the value of the home, properties rarely sell during a foreclosure auction. This is where Real Estate Owned (REO) home sales come into play. When a home doesn’t sell at a foreclosure auction, the mortgage lender takes back the home, making it an REO property.

It’s important to keep in mind that mortgage lenders don’t want to own properties for long, as they represent money that could be used for stock purchases or other investments. Vacant homes aren’t bringing in any money for the lenders, so it’s in their best interest to sell these properties as quickly as possible. Lenders also don’t want to incur the costs associated with maintaining the homes themselves.

So how do lenders sell these REO homes quickly after they weren’t able to sell them at a foreclosure auction? They do so by offering major advantages to buyers that weren’t available as part of the foreclosure sale. Some of which are:

• Buyers can get REO homes at below market value prices and with an unusually low down payment.
• Lenders will pay for back taxes and liens owed on the home.
• Lenders will take care of the eviction of former homeowners who may still be living in the home, so the buyer doesn’t have to hire someone to do that for them.
• Buyers have immediate access to the home for inspections and appraisals, making the buying process quicker.
• It’s easier to negotiate a better price for repair costs, closing costs, etc. with an REO home purchase.
• When a home is repossessed by the mortgage lender, the title is clear. This way, when a new buyer purchases an REO home, there’s no question about who owns the property.

So, if you’re an investor looking for a rental property, a foreclosure home might be a great option for you. However, for most people, an REO home purchase is the more convenient and financially beneficial choice.