Financing a Pre-Foreclosure Home - The Short Story
You can get some outstanding deals by purchasing pre-foreclosure homes, but there are a few things to look for and keep track of.
A pre-foreclosed home sale is defined as:
- The homeowner must be more two months delinquent on their mortgage.
- The home needs to be worth at least 70% of the value of the remained loan.
- The sale price has to be at least 95% of the appraised value.
You have many of the same options open to you that a regular homebuyer does. The main difference is that you need financing to be in place very quickly. Pre-approval on a loan is a good idea. With pre-approval, a bank or mortgage provider has already guaranteed your purchase up to a certain amount.
Once you’re pre-approved the bank will give you a checklist of criteria that the home needs to meet. As long as the house meets those criteria, the sale is virtually guaranteed.
The transaction is likely to also be guided by the seller’s lender. You may find that you need to negotiate with their back as well as the buyer to complete the sale.
Note: If you’re trying to purchase HUD home, there will be additional steps that must be taken.
Buying a pre-foreclosure home is a great way to save a lot of money. The most important thing to remember is that it must be done quickly.