What exactly is foreclosure?
Glad you asked. When a home has been foreclosed on, it has been taken from the owner by the lender (the bank). It is also possible that when a home goes into foreclosure, a local mortgage company will take possession of it as a way to pay off the debs of the homeowner. When you hear ‘foreclosure’, think ‘total loss’. Unfortunately for these homeowners, they loose any rights and all money invested into the property.
Why Choose Foreclosure?
A foreclosed home is a great way to purchase a property for a fraction of the average market value. Buying a traditional home is not much different than buying a home under foreclosure. The difference being that you can use a FHA or VA loan to secure the funds.
Negotiation is another great tool you can use in your favor. The bank will be looking to sell the house as quickly as possible, so you will be able to negotiate the best price for the property. The longer the property is on the market, the more money the bank loses out on it. The bank will have an incentive to get the property off their hands as soon as possible.
If you’re able to come across a home that is in pre-foreclosure, even better. If you find a property that is about to enter the foreclosure process, there will be a very small window for the current homeowners to find a buyer in order to prevent the home from moving into foreclosure.
What to know before buying.
If this is something you’re thinking about pursuing, you’ll first want to work with a realtor that has experience in this area, or a realtor who specializes in foreclosures.
Debtor damage is always something you want to look out for. Keep in mind that the reason the home is foreclosed on in the first place is because the owner can no longer afford to pay for the home. On one hand, you might be getting a great deal, but on the other, it’s possible you might be dealing with an upset occupant. The debtor may damage the home before moving out. ]
What You’ll Need.
Be sure to get a letter of pre-approval. This will show the lenders that you are serious about sealing the deal. The pre-approval letter details how much money you’ve been approved to borrow and will typically include the loan and interest rate you’ve qualified for.
A pre-approval letter is not assurance. If your financial situation changes it can affect your pre-approval.
Resources.
To save you some time in searching for a foreclosure specialist, don’t bother. We specialize in pre-foreclosure deals. Head over to www.mmresolutions.com to see how you can get started. Also, check with different mortgage lenders and work towards getting a pre-approval.
By: Mike Pugliese