How Can I Get A Mortgage Loan To Buy A Foreclosure Home?
Foreclosure homes still appear to offer great deals for home buyers, so how can you get a purchase mortgage to scoop one up?
While the foreclosure crisis officially ended when the market began to turn around in 2011 back logs in processing them at servicers and in the courts has meant several years’ worth of properties that are expected to trickle onto the market. This means continued opportunities for home buyers of all types to pick up appetizing property bargains. Foreclosure homes can be great for first time home buyers looking to get onto the property ladder. They can provide great value for move up buyers looking to finally score their dream home and remodel it to their personal tastes. And they have been a favorite among real estate investors.
So how can buyers get purchase mortgage loans to acquire these highly desirable house deals?
Mortgage Loan for Foreclosure Homes
Foreclosure properties are just regular homes that have fallen into delinquency (pre-foreclosures), or have been repossessed by banks and lenders and have become classified as REOs (Real Estate Owned). So theoretically any regular purchase mortgage loan option can be used to acquire these properties including conventional Fannie Mae and Freddie Mac home loans, government backed FHA, VA, and USDA loans and other alternative programs.
However, this doesn’t mean that there aren’t quirks in the system. In a few cases sellers of distressed properties might only want to entertain cash offers. This doesn’t have to mean a dead end. If there are enough savings on hand or in retirement accounts they may be bought for cash and then rapidly refinanced to enjoy the best of both worlds. However, it is critical for buyers to speak with a mortgage loan officer in depth in advance to ensure a smooth refinance, and avoiding any issues which could sabotage financing plans.
Another snag can be the condition many of these foreclosure homes can be in. Many have been abandoned and left vacant, others are just outdated. This can be an issue for some mortgage loan lenders depending on what repair needs and flaws there are. So speak with lenders first to find out what will be a problem or not, and get home inspections done early.
The same goes for title issues. Some titles have been flawed due to robo-signing and other real estate fraud scams. So request title searches and insurance policies as early as possible too.
With such great value to be found and such attractive mortgage loan rates, buyers shouldn’t let these little potential quirks to turn them off. If you don’t get the answer you want the first time keep shopping and you’ll find a mortgage lender eager to help.