Tips Buying Foreclosed Homes

When you are considering buying a home looking at foreclosed homes may seem like a good idea. You can get a good property at a good price but it may not be possible to build a relationship with the previous owner. After all, you are buying his property that he did not want to sell but was forced to by the court system. Although it would be nice to know any little quirks about the house from the owner the benefits of buying a foreclosed home will often outweigh this minor little inconvenience. One important thing to know is that buying a foreclosure is not as simple or easy as buying a regular home. You will need to take special care when buying a foreclosure.

When purchasing a regular home that was on the market to be sold one of the first things that most prospective buyers get to do is take a tour of the house. When buying a foreclosed house this may not be an option. You may be given detailed information regarding the home’s amenities, detailed information in regards to the home’s floor plan, the address, and square footage, but the first time you may be in the home is after taking possession.

You may walk into a well taken care of home or it may be run-down inside with carpet that has to be replaced, walls need to be painted, plumbing not working all the time, and a multitude of other problems. The owner may be bitter about having lost his property to foreclosure so they decide to wreck the inside of the house before being forced to move out. In some cases the price of the home is so inexpensive that what the condition of the inside of the home is not that much concern to the potential buyer.

When purchasing foreclosed homes the buyer needs to be aware that this means that the home comes “as is.” The home may need major repairs before or after it is sold. The owner can decide to do the major repairs or not. Considering the circumstances as to why the home is being sold there is little chance that the owner will feel any obligation in helping the buyer with this problem.

In some jurisdictions, there is the right of reclamation, which means even after the home is sold the previous owner could agree to purchase the house for the same price it was sold for at foreclosure during a certain period of time. If the previous owner decides to exercise that right there is nothing that the new owner can do about it. Although this a rare occurrence it can cause substantial conflicts so buyers of foreclosed homes should be aware of this possibility.

Foreclosure Help 101

Foreclosure Options

Are you behind on your payment, but want to keep your home? Or, you have not yet missed a mortgage payment, but are worried you will fall behind? Now is the time to save your home. You may be eligible to modify your existing mortgage with a loan modification agreement to make your payments more affordable. There are programs such as HAMP which are specifically designed to help homeowners with recent or past financial hardships.

What is a Loan Modification?

A Loan Modification, the most popular program; is the change of an existing home loan down to an affordable level in response to a borrower’s long-term inability to repay the loan by the lender. Typically a Loan Modification involves the reduction of the interest rate, principal balance, or extension of the length of the loan term; or the combination of the three (3). You possibly qualify if you have recently recovered form a hardship and can afford the new payment amount offered. Most lenders can work with home owners, even if they have a foreclosure date or bad credit.

Loan Modification Qualifications:

– You do not make enough money to pay your current payment

– You lost your job

– You are on unemployment

– Current/Behind

What are the benefits?

– Remove delinquency status with your lender

– Reduced monthly mortgage payment

– Fresh start

– Stay in your home and avoid foreclosure

Principal Balance Reduction

A Principal Balance Reduction is a process that a loan modification attorney assists a home owner in when negotiating the principal balance that is owed down; to reflect the current market value of the property. Typically to lower your monthly mortgage payment the interest rate of the loan is reduced to the current market rates.

What is a Mortgage Forbearance Agreement?

Your bank may offer a solution to repay your past due payments and avoid foreclosure with a Mortgage Forbearance Agreement, depending on your situation. The forbearance agreement is made between the delinquent borrow and the mortgage lender. In which the lender agrees not to take legal action and foreclose on a mortgage, and the delinquent borrower agrees to a new mortgage repayment plan. A Mortgage Forbearance Agreement is a temporary solution designed for delinquent borrowers who have had unseen financial problems. Typically the Mortgage Forbearance Agreement allows a borrower a minimum of four (4) months and a maximum of twelve (12) monthly mortgage payments.

How To Get Foreclosure Help

We recommend that you research any government programs that you may qualify for. If you are not confident in applying for the correct government program for yourself or don’t have the time or energy to deal with your lender; give us a call at (855) 901-2224. We help people on a daily basis find and enroll in the right program for their situation!

Stages of Foreclosure

Foreclosure:

A foreclosure occurs when a property owner cannot make payments on their loan. If a homeowner unable to keep up with payments he simply had to relinquish the property back to the bank that holds the mortgage on the house. A bank can bring a foreclosure action against the homeowner. They can sell or repossess (take ownership of) a property in order to recover the amount owed on a defaulted loan secured by the property. A homeowner’s rights to a property are forfeited because of failure to pay the mortgage. If the owner cannot pay off the outstanding debt or sell it via short sale, the property then goes to a foreclosure auction. If the property does not sell at auction, it becomes the property of the lending institution. Foreclosures are fairly straight-forward sales because the banks typically do not want to be “home owners”, they want to be “home loaners”.

Here are the five stages for foreclosure:

• Missed Payments:

Foreclosure is a long process, which varies from state to state. A foreclosed property is a property that has already been taken over by the bank. This stage begins when the homeowner falls behind on home-loan payments (or sometimes other terms of the loan). This is usually due to hardships such as unemployment, divorce, death or medical challenges. Lenders may wait for a second, third, fourth or even more missed payments before sending the homeowner a public notice.

• Public Notice:

After three to six months of missed payments, the lender records a public notice called ‘Notice of default’ (NOD) with the County Recorder’s Office, indicating the borrower has defaulted on his mortgage. Notice of default and intention to sell must be mailed to the homeowner within 30 days of the recording. This notice is intended to make the borrower aware that he is in danger of losing all rights to the property and may be evicted from the home.

This NOD includes the property information, your name, the amount you’re delinquent, the number of days that you’re behind, and a statement indicating that you’re in default under the terms of the note and the mortgage you signed when you purchased your home.

The homeowner has a given period of time to respond to the notice and/or come up with the outstanding payments and fees. If the money owed or other breach is not paid in a given time, the lender may choose to foreclose the borrower’s property.

The next step is for the lender is to file a notice of sale for the property. However, if the borrower catches up on his or her payments, the foreclosure process can be halted.

• Pre-Foreclosure:

This stage begins when lender files a default notice on the property, which informs the property owner that the lender will pursue legal action if the debt is not taken care of. After receiving notice from the bank, the homeowner enters a grace period known as “pre-foreclosure”. During this time the homeowner can work out a deal with the bank or pay the outstanding amount owed before it is foreclosed. Property owners who are in the pre-foreclosure stage may enter into a short sale in order to pay off outstanding debts. If the borrower pays off the default during this phase, foreclosure ends and the borrower avoids home eviction and sale. If the default is not paid off, foreclosure continues.

• Auction:

If the default is not remedied by the prescribed deadline the lender or its representative sets a date for the home to be sold at a foreclosure auction (sometimes referred to as a Trustee Sale). The Notice of Trustee Sale (NTS) sale is recorded with the County Recorder’s Office. Notification is sent to the borrower, posted on the property and printed in the newspaper. At the auction, the home is sold to the highest bidder for cash who must pay the high bid price in cash, typically with a deposit up front and the remainder within 24 hours. The winner of the auction will then receive the trustee’s deed to the property. An opening bid on the property is set by the foreclosing lender which is usually equal to the outstanding loan balance and any other charges. Money from the sale is used to pay off the costs of the foreclosure, interest, principle and taxes etc. Any amount left over is paid to the homeowner. In many states, the borrower has the “right of redemption” (he can come up with the outstanding cash and stop the foreclosure process) up to the moment the home will be auctioned off.

• Post-Foreclosure:

If a third party does not purchase the property at the foreclosure auction or there are no bids higher than the opening bid, the lender takes ownership of it. The property will be purchased by the attorney conducting the sale, for the lender. If this occurs and the opening bid is not met, the property is deemed as a Bank-Owned Property or Real Estate Owned (REO). This occurs because many of the properties up for sale at foreclosure auctions are worth less than the total amount owed to the bank or lender or when no one bid on it. The “bank owned” property is then put back on the market for sale, usually listed through a real estate broker.

Steps To Buy Real Estate Below Market Value

It patently requires time, work and ability to get an incredible deal for land. Obviously getting profitable deal is one of the tasks of entire business. But here we will let you know how to make a profit on purchasing a property. Doing this obviously requires research, skilled transaction and complete dedication – still if one follows the given underneath techniques you can yield stunning achievement.

To be effective in Real Estate you need to know how to purchase land below the market value, and purchase properties that bode well. For this we will first let you know why individuals offer property below market value, what its real market worth is and afterward how you can purchase land below market value.

Why do individuals offer property below market value?

Nobody wishes to offer their property less than its value. If one is doing so then undoubtedly there must be some reason for that. In majority of the cases reason is time pressure. Choices can frequently be irrational and emotional in these circumstances. For Example:

– Facing budgetary issues.
– To share funds with legatee.
– Facing Foreclosure Problems
– Personal issues.
– Interested in another property.
– Migrating because of work issues.

Whenever you discover a dealer who is keen on Short Sale, it’s nothing less than a golden opportunity for you to confer the deal with the cost and contract terms in your favor.

In such cases, never be reluctant to make inquiries like: “What is the reason of sale?”; “For how long has the property been available in market?”; Knowing these details will give you a clear idea of how much room is there for negotiation due to which your deal will turn out to be simple.

What is its real market worth?

Market worth is the original cost at which a specific property will be sold in its present condition. The cost is determined by the business sector or at times it also relies on the interaction of a purchaser and dealer. Remember that it is not settled like the cost of an item at a retail shop. This makes land bargains at an exceptionally productive open door. There is only one way of finding the definite business sector estimation of a property if you are not an agent and that is by observing practically identical deals. You have to discover recent offers of comparative properties in surrounding areas for this. It is the most accurate way to do this on your own. Likewise the least demanding way to know the market value for this is to go for such service suppliers. They will take complete liability to provide you a beneficial deal.

Remember that if you are looking at a property that necessitates repairs then you need to get it in even lower cost else you aren’t purchasing underneath real market worth.

Approaches to purchase real estate below market value:

To purchase real estate most importantly get this clear that there are short sales below market value, there are Fair market deals, auctioned property and the off market properties that can be sold below market value. With a specific end goal to use benefits of purchasing real estate less than its market value, go for these properties.

Short Sales are a phenomenal hotspot for financial specialists. Short sales are possessed by private vender; however the vender has a commitment to pay the bank more than for the amount they are attempting to offer the home. With a specific end goal to sell the home, the bank needs to take consent to take less cash than they are owed. Truly, short sales take up to 6 months or even a year to close since sellers here don’t effectively hop onto a conclusion. They take their requisite time to settle on choice.

Fair market deals are homes claimed by a private vender who have reasonable play in the home selling decisions. They can offer it without including the bank in the basic leadership. It is harder to discover fair market deals in light of the fact that the merchant is generally not in a gigantic hurry to offer their home underneath market value. There are fewer situations where you can find a great deal on a fair market sale.

Numerous service providers go for a property that is never listed for sale since they expect that it might cost them not exactly genuine market worth and they could easily gain the benefit. These are off market properties, since they are not available to be purchased. It requires cash and investment to have the capacity to buy these sorts of speculation properties.

At the point when a property is dispossessed by a seller, so it’s obligatory for him to attempt and reclaim its misfortunes before promptly assuming responsibility of the property. That property is termed as auctioned property. This is the reason numerous homes are unloaded at the courthouse steps. So you should simply, determine when your local courthouse holds its auctions and grapple the most profitable deal from it as soon as possible.

In addition never let go the deals in which such terms are being used by the vender:

#Desperate Merchant
#Divorce
#Decreased Estate
#Distressed Property
#Induced Seller

Generally speaking, to figure out how to purchase real estate underneath market value all you need to do is a lot of work and sparing time in research, hence after adapting these techniques your deal can be extremely profitable.