Nearly 2 million homes have been foreclosed upon this year, according to the Center for Responsible Lending. Although there are bargains to be found for folks who want to purchase a foreclosure, getting involved with such a deal isn’t for everyone. Here are some things to remember.

1. Get preapproved for a mortgage before you begin shopping around for a foreclosure. That’s because some mortgage lenders won’t underwrite home loans on foreclosed properties. But there are mortgage lenders who allow mortgage loans on foreclosures that are in good condition. If you are fortunate enough to already have a home equity loan, this could also be used to purchase a foreclosure as a vacation home or investment property.
2. Look for properties on real-estate sites that list properties that are in foreclosure, such as Foreclosure.com or RealtyTrac. You’ll pay a fee for using these sites, but will get a good idea of what type of homes are available in your area. You can also contact banks to see if they will give you a list of bank-owned homes for sale. A bank offering a property for sale may be willing to give you a home mortgage to purchase it.
3. Unless you are an experienced real-estate investor, avoid trying to purchase a foreclosure on your own. Find a realtor and attorney who have lots of experience with foreclosures. These people should understand local laws concerning foreclosures.
4. Avoid buying at auction if you are new to foreclosures. You usually won’t be allowed to inspect properties before they to to auction, so you’re taking a big chance purchasing a property this way. Auctioned properties also may have tax liens.
5. Expect to make repairs on a foreclosure. A lot of foreclosures are damaged by angry homeowners or fall into disrepair from sitting empty for a long time. Go into a foreclosure situation with as much information as you can get. Hire an inspector to give a full evaluation of any property you plan to buy.

Yes, there are people who are getting great bargains by purchasing foreclosed homes. But if you want to buy a home this way don’t let your emotions get in the way. It’s essential that you thoroughly research the different ways you can buy a foreclosure, as well as the process for obtaining a home loan for this purpose. You can search for a mortgage here to get an idea of what type of financing is available for a foreclosure purchase.

Tags: home equity loan, home loan, home mortgage, mortgage, mortgage lender, mortgage loans

This entry was posted on Sunday, October 11th, 2009 at 2:03 pm and is filed under General Mortgage Info, Mortgage News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.