How Do Forclosures work?? can you buy them to live in? rent out?resale?and what determines how much they cost?

Question

also can you take out a loan to pay for one?? and can you live in a different home and rent it out to pay for the amount you pay monthly on your loan took out to buy it??

Answer 1

LOL I see that your an amateur at this.... Well a foreclosure is a house that is taken from someone who cannot afford the payments. Banks put foreclosed houses on the market to try and re coop what they lost from the previous homeowner. In most cases banks usually sell the homes for what is owed by the previous person. I did say most cases; depending on the house and the area its located if the bank feels that it is a very marketable property they will try to get the most out of the house as possible. You can buy a foreclosed property through banks auctions real estate agents or reo's. Purchasing a foreclosed property is just like purchasing a regular house it's just usually cheaper. If you already have a home then you can either buy a foreclosure as a second home or an investment property. Its totally up to you what you are going to do with the house once you own it. As far as paying for it and living somewhere else if you have the adequate credit score and or down payment you will have to get with a good mortgage broker or loan officer at a bank. Make sure you read all the information given to you and if you don't understand something ask a question. There are a lot of people out there who aren't honest in the real estate business and if you go at it being a newbie they tend to take advantage of you. Good Luck

Answer 2

I suggest that you go to your favorite book store, purchase a few books on foreclosure, flipping and resale of distressed properties.

In answer to your question you may purchase a foreclosed property and use if for any purpose you see fit as a primary resdience, a rental or a second home.

Now there are several phases of the foreclosure process.

#1 Pre-foreclosure, the current owner has failed to make the necessary monthly payments to his lender. Each mortgage company determines how long they will allow a borrower to go without placing them in foreclosure.

Technically if you are one day late in paying your mortgage the mortgage company can place you in foreclosure. Normally the mortgage company will allow between 30-90 days before starting foreclosure procedures. They will send you a bunch of threatening letters.

Normally You may contact this individual to see if you are able to purchase the property directly from the current owner.

You must have enough funds to bring the mortgage current, pay the present some money for his equity, allow for any repairs that need to be done. Now after all this is taken into consideration check and see if you an make any money out of the transaction or if it fits your needs and your purpose for the purchase.

You may get a mortgage loan for the pruchase from the owner, however, you want to be aware of the time limits in which you are working.

#2 Foreclosure, now the lender has actually recorded a "Notice of Default" the property still belong to the owner, so you still have to make and deal with the current owner.

#3 Notice of Sale, the owner has failed to bring the mortgage current and the mortgage company has decided to place the property up for sale to see if they can get the minimum of the loan amount, any and all foreclosre fees and cost. This notice establishes the date the property is to be sold.

The lender at this point want the borrower to pay off the complete loan. In certain circumstances they will still allow the borrower to bring the mortgage current while he continue to make the montly payments.

#4 The date of sale, the lender places the property up for auction with the property going to the highest bidder. If the bid do not reach the loan amount plus foreclsoure fees the bank takes possession of the property and it becomes a Bank owned property commonly called a REO.

At this point once all the legal stuff have been worked out and completed the lender will not hire a real estate broker to market the property for what ever the market will bear.

At this point you have to deal with the real estate broker and his agents to purchase this property.

You may qualify for and get a mortgage loan for the purchase of this property.
I hope this has been of some use to you, good luck.

"FIGHT ON"

Answer 3

You either have to pay 100% up front of have such spectacular credit that you can get an unsecured loan to clean up forclosed property. Ordinarily, the lender is trying to recover the balance due on the mortgage. If that is less than the value of the property, you can do well. In today's market with many buyers upside down, the value of the property is less than the mortgage.