Is It Risky to Buy a Foreclosure Home?

Verifying the title

To avoid a legal hassle down the road, it's best to hire a title company or lawyer to research the title of the home you're interested in to make sure it's free of liens and back taxes, and that the foreclosure was done properly. It's also good for lenders and buyers to carry title insurance.

These are common precautions for any home purchase — but with a foreclosure they're even more important. In the event that a foreclosure is deemed invalid after you purchase the home, an extremely rare situation, the title insurer would defend your claim to ownership.

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Carole Fleck is a senior editor at the AARP Bulletin.