How does foreclosure works? Is there any hidden costs?

Question

I'm interested in buying a property, and I saw the prices on foreclosures and I was wondering how it worked, and see if it will work for me I had a house two years ago but I had to sale because I lost my job.

Answer 1

No hidden costs, but you need to know how to make your offer attractive, and you need to be willing to risk some cash.

There are also special risks and concerns. So I seriously advise having more than one loan provider working for you, and a good buyer's agent.

Answer 2

Every State is different...But a lot of times the homeowner has a redemption right. Sometimes up to 2 years. Basically, they would only have to buy their house back from you for what you bought it at the auction, plus a small percentage. You have to be real careful with foreclosures, because you don't get a chance to see the condition of the home. Also, keep in mind that getting the occupants out can be very difficult and sometimes heartbreaking, especially if they have children. Make sure you do your homework and find out if the property has any other liens attached to it...People that don't pay their mortgage tend to get behind on other debts as well. Only buy if their is a whole lot of equity built in.

Answer 3

Foreclosure is a process, highly regulated by state law, in which the lender tries to recoup the amount owed on a defaulted loan by either selling or taking ownership of the property. The foreclosure process begins when a borrower/owner doesn't make their mortgage payments, and the lender files a public default notice. The foreclosure process can end one of four ways:

1. The borrower/owner pays off the default amount to reinstate the loan during a grace period determined by state laws. This grace period is also known as pre-foreclosure, and can be as much as six months. The mortgage loan is reinstated, as if nothing ever happened. Happy ending for the homeowner!

2. The borrower/owner sells the property to a third party, either before or during pre-foreclosure. The sale allows the borrower/owner to pay off the loan. This is not as happy an ending for the homeowner, but avoids the consequence of having a foreclosure on the homeowner's credit history. A smart homeowner who realizes that making the payments is becoming problematic will choose this course of action before things progress to the next level.

3. If the homeowner cannot catch the payment up to make them current and either cannot or will not sell the home, the lender will usually schedule an auction. A third party may buy the property at a public auction at the end of pre-foreclosure.

4. If the auction does not bring about a sale of the property, the lender will take ownership of the property, usually with the intent to re-sell. The lender can take ownership through an agreement with the borrower/owner during pre-foreclosure or by buying back the property at the public auction. These are also known as bank-owned properties, and are sometimes listed with Realtors.

Unfortunate as the reality of foreclosure is to the person who is losing their home, this turn of events creates opportunities for the investor. The steps in the foreclosure process vary from state to state, but can generally be described as:

1. Pre-Foreclosure

Buying a property in pre-foreclosure involves approaching the borrower/owner and offering to buy the property. This starts with a "Notice of Default" and, if the homeowner cannot correct the situation, continues with the filing of a "Lis Pendens", or a notice of pending action.

This requires that the investor make contact with the distressed homeowner, negotiate with the homeowner, who is usually in some kind of crisis, and reach an agreement to purchase. Good "people skills" are of the utmost importance.

When an investor buys the home during this period, the borrower/owner can walk away with something to show for any equity in the property and avoid a bad mark on his or her credit history.

The buyer has time to research the title and condition of the property and can realize discounts of approximately 30 percent below market value.

2. Auction

If the loan is not reinstated by the end of the pre-foreclosure period, a "Notice of Foreclosure" is issued by the lender to the homeowner.

Lenders do not want to be in the Real Estate business, and will often enlist the aid of an auctioneer to sell the property prior to taking ownership. Potential investors can bid on the property at a public auction.

If you are buying, be aware that you are often required to pay in cash at the auction and you may not have much time to research the title and condition of the property beforehand.

However, a public auction often offers some of the best bargains and avoids the stress and unpredictability of dealing directly with the borrower/owner, who can decide to change their minds at the last minute and break the agreement you reached with them.

3. Bank-owned

If all else fails and the lender winds up taking ownership of the property, either through an agreement with the owner, during pre-foreclosure, or at the public auction, the lender will usually want to quickly re-sell the property to recoup the amount of their unpaid loan.

The lender will probably make sure the title is clear for any buyer, but the potential bargain is typically less than a pre-foreclosure or auction property.

If you are looking for foreclosure properties to buy, the place to start is in the "Legal Notices" section of your newspaper. You will find the notices of pending action, and can contact the homeowners before they get further into the quicksand of the legal process.

Networking and making contacts with attorneys and lenders is also a way to find properties. Most of these people are good people who have had some tough breaks and need a fresh start.

There are also web sites that feature foreclosure properties for sale. These sites can be a great resource if you are buying statewide or nationwide, rather than in one city or county.

Answer 4

Foreclosure is the legal proceeding in which a bank or other secured creditor sells or repossesses a parcel of real property (immovable property) due to the owner's failure to comply with an agreement between the lender and borrower called a "mortgage" or "deed of trust".

The highest bidder at the auction becomes the owner of the immovable property free and clear of any interest of the former owner but the property may be encumbered by any liens superior to the mortgage being foreclosed (e.g. a senior mortgage, unpaid property taxes etc). Further legal action, such as an eviction may be necessary to obtain possession of the premises.

Answer 5

every state is diffrnt. make sure u get proffesional advice if youre serious. or look around for unclaimed properties.

Answer 6

Try this site for a real estate agent


http://realestateagentlive.com/index.php

Answer 7

Foreclosure properties, REO (Real Estate Owned) property owned by banks and other lenders, and properties threatened with imminent foreclosure all represent great investment opportunities for property buyers. They are the most popular source of affordable deals for those seeking bargain homes, because foreclosures often sell at or below wholesale prices. If you are looking to buy a home and your funds are limited, foreclosure houses may be just what you are looking for, since they are oftentimes cheaper than new homes. Even if you are not limited by money, buying home foreclosures houses may afford you a larger home than you would normally be able to buy. Even if a foreclosure house is a fixer upper, it can be sold at a profit after repairs.

Buyer Beware When Purchasing a Foreclosure House: There are a few issues you should be aware of when buying foreclosure homes:

* Find out if they have any warranties on the foreclosure house.
* Check the title.
* Know your state's disclosure laws.
* Find out why the house ended up being in foreclosure.
* Are there taxes on the foreclosure house?
* Will you have to evict current tenants?

Anybody can buy this kind of property. Basically all you need is some money and a willingness to bid. But be aware that if you attend a property auction, you may wind up bidding against professional foreclosure investment specialists who are also looking for cheap houses. If you are unsure about how the foreclosure real estate game is played, learn as much as possible ahead of time in the Learn Section of Bargain Homes, so that you are not at a disadvantage when making your purchase offer.

Before stepping into the foreclosure property arena, it is important to educate yourself. You’ll want to know as much as possible about such things as the pitfalls of hidden costs. For example, when purchasing a house that has a lien against it, the buyer may be responsible to pay back that debt. Such strings-attached baggage can include huge amounts of money owed to the IRS.

And you will want to explore various ways to come up with the money necessary to finance your purchase of a foreclosure. Some lenders don’t lend money for foreclosure property mortgages, while other lenders are eager to make loans to help you buy. To find out more, do some homework ahead of time, so that you can approach the foreclosure auction with confidence and adequate financial backing.

Use knowledgeable resources to find answers to your foreclosure questions. Be patient, and don’t rush into the first opportunity that comes your way. Foreclosure properties are everywhere and more come onto the market each day. As you study how the process works, continue your hunt for the right investment to suit your needs, by dedicating some time each day to searching through real estate foreclosure listings in your area.
Look for information, leads, and advice on financing.

To help you finance foreclosure property:

Pre-qualify for a bank loan

Money talks. If you want to walk away with the property, show cash up front. Sellers respond when they have confidence that you can support your offer with prompt financing, so pay a visit to your mortgage lender before you shop for houses.

You can get pre-qualified in a matter of minutes, by showing a few documents and submitting to a credit check. And if you want to really up the ante, go ahead and get pre-approved for the loan, up to a certain amount. With a pre-approval letter in hand, you can open doors and have a distinct advantage over other competing bidders.

Assume the seller’s loan

If the terms of the loan allow it, you can take over the existing payments and solve two problems at the same time. 1) The strategy is good for the seller, who avoids foreclosure. 2) And as the buyer, you are able to simply cure the default and take over the existing loan without significant loan processing fees or delays. Veteran’s Administration (VA) loans are great in this respect – if you find an assumable VA loan you should definitely take advantage of the flexible option it represents.

Owner/Seller financing options

Owners who are faced with the dreadful possibility of foreclosure are usually happy to work with you, if it means they can save their credit from ruination. If you are able to take over their loan, it is a big help to them. In return for being rescued from a sea of debt, sellers will often accept terms that are very attractive to buyers.

For example, if you don’t have cash for a down payment, you can work out a deal with the seller so that they can stay in the house, rent free, for a certain period of time, in lieu of a down payment. Or you could offer them reduced rent, in exchange for their labor to help you fix up the place before you sell it, which reduces your remodeling costs.

Home Equity Loans

Sometimes the financial capital you need is right beneath your feet. If you own a home with accumulated equity, you might be able to find a great source of investment money without ever leaving home. Lenders will usually charge a slightly higher rate of interest for a second mortgage or home equity loan, but the interest and many of the closing costs are tax deductible, which offers extra savings over time. And once you secure the loan and buy your foreclosure property, you can always leverage the new piece of real estate as collateral and refinance to a lower interest rate.

Private lenders or investment partners

One of the most common arrangements in the real estate foreclosure business is partnership with lenders who have money to invest, but are not interested in doing the day-to-day work required to buy and sell property. You may have a colleague, friend, or family member with investment capital, and you can sit down and iron out an agreement to share the profits of your joint venture. They put up the money so that you can bid on foreclosures, and then you pay them back with a share of the proceeds when you sell the property and reap a capital gain.

You can also get funds from professional investors who lend money for a cut of the action. And if you have trouble getting a traditional loan from a bank, there are plenty of legitimate lenders who specialize in providing “hard money” loans, or loans with higher interest rates made to people who would otherwise be turned down. Find a reputable lender.

Go to this link on how to buy a foreclosed home: http://www.ehow.com/how_111013_buy-foreclosed-home.html

Answer 8

http://www.foreclosures.la