Foreclosures are abundant right now, making buying one very tempting for new home buyers.
ARM loans are just now starting to reset, thereby ensuring a large amount of real estate owned inventory is primed to hit the market in many US cities.
Combined with an $8000 new tax credit, buying an REO foreclosure is very appealing to new home buyers.
Here are some things you should keep in mind when buying a foreclosure:

1. The oldest mantra to real estate is Location, Location, Location.
   With the current economic crisis, gentrification has slowed - meaning neighborhoods that are bad will stay bad longer.
   Look on a map to see where you'd like to live before even thinking about buying.
   
2. Foreclosures are usually fixer-uppers.
   You will need to either have a lot of home improvement skills, or be willing to spend a decent amount of cash turning your foreclosure into your dream home.
   
3. If you are buying a foreclosure at an auction, be sure to look at any liens on the property and adjust your purchase price accordingly.
   More than one person has been burned with a lien-ridden property at an auction.
   
4. Look into your loan options! HUD FHA financing and Fannie Mae Home Path mortgages are right for some, whereas conventional loans are easiest to achieve in this economy (provided you have 20% down!).
   
5. There is no need to purchase a membership to an expensive listing site - talk with your realtor about buying a foreclosure.
   

Understanding and going through the process can be tough, especially if this is your first time buying a home.
Dont discount going with a realtor, you can avoid frustration and have a guide to the wonderful world of under-valued real estate! Foreclosures are tricky business but with savings of up to 25%, the price couldn't be more right.
Foreclosures often need a ton of tender love and care before they are able to be lived in.
A couple of things to be aware of:

1. Realtors may not have your best interests at heart - they will collect their 3.
   5% when you purchase the house, regardless of your quality of life afterwards.
   
2. Always, always, always do a home inspection.
   They cost about $400, but could save you much more than that.
   
3. Never be afraid to ask questions - buying a house is a huge move financially.
   You'd be a fool not to be concerned.
   

We will be discussing what to look for, and what to expect when purchasing foreclosed properties in upcoming articles.
Stay Tuned!