It is still possible to buy foreclosure properties cheaper than wholesale. (Photo Credit: CC BY/Jeff Turner/Flickr)
Foreclosure rates remain astronomical and tragedy continues to hit families across the U.S. Yet one man’s tragedy can be an innocent investor’s opportunity. If you’re looking to snag an affordable home for cheap, learn how to finance a foreclosure property.
Foreclosures and REOs await
Thankfully, financing foreclosures and Real Estate Owned (REO) is an option that anyone who can come up with the money and is willing to bid can pursue. It is important to note that if you do attend a foreclosure property auction, you may have to bid against seasoned pros, which can drive up prices. If you keep your cool and learn a little before going to auction, you’ll do well, according to AOL Real Estate.
Dollars and sense
Understand that there will be hidden costs along the way. For instance, when purchasing a property that has a lien against it, you may be required to pay back the debt. Disgruntled finance companies and the IRS are not ideal company when you’re looking for a cheap date with foreclosure destiny.
In order to make your foreclosure experience a cheap date to remember, do some financing research. Not all lenders will lend money to purchase foreclosures, so be sure your lender of choice will back you before you go to auction. Bargain Homes suggests that prospective buyers remain patient as foreclosure properties flood the market daily. You can afford to take your time and wait for the right one. Take time each day to browse listings.
How to finance your foreclosure: The big steps
First, pre-qualify for a bank loan. Private lenders you can pay back with a share of the proceeds are desirable. Cash up front is very persuasive to a seller and can give you a leg up on competing bidders. With just a few documents and a credit check, you can obtain loan approval up to the amount foreclosure are going for in your area. Know what that figure is before you apply for a loan.
Another advantage you can gain when financing a foreclosure is assuming the seller’s own loan, provided the terms allow. This saves the sellers from experiencing a foreclosure and saves their credit. It also saves money on excess processing fees as well as time. AOL Real Estate writes that if the loan you’re assuming is a Veterans’ Association loan, the flexibility it affords is attractive.
If you already own a home, you may want to consider a home equity loan. Though the interest rate you’re likely to get on a second mortgage is likely to be higher than the original mortgage, the interest and closing costs are tax deductible. Provided you maintain good credit, try for a refinance at a better rate later.
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