How To Get A Foreclosed Home With No Money?

How To Get A Foreclosed Home With No Money?

Don’t have enough money but want to buy a home? You may be wondering how to buy a foreclosed home with no money, and it's not as impossible as you think.

How to buy a foreclosed home with no money?

Foreclosure is the legal process that occurs when a homeowner fails to make mortgage payments and the mortgage lender files a notice of default with the county recorder's office. If you visit your local county recorder's office once a week and look for properties with a default notice, you may be able to obtain a foreclosed property before it hits the market.

Ultimately, the lender is required to issue a note of sale, which is usually published in a local newspaper. The seller can still sell the property to recoup the unpaid portion of the mortgage before the lender sells the property at public auction or private sale. This makes foreclosed homes particularly attractive to people without money because they can sometimes be purchased for less than market value.

How to get a foreclosed home?

Pre-foreclosure – The lender notifies the owner that they are in default and if payments are not made, a notice of sale is pending. This is especially lucrative for new investors because you can often convince the homeowner to sell. By selling to an investor, homeowners can prevent foreclosure and credit conflicts.

Short Sale – If a home is underwater and the homeowner is experiencing some type of financial difficulty, a lender may be willing to short sell the property and collect less than the outstanding mortgage amount. This is a fairly lengthy process that can take several months, depending on the lender.

Sheriff's Sale Auction - Also called a public auction, this is the final step in the foreclosure process where the property is auctioned off to the highest bidder. The biggest disadvantage of this type of auction is that you cannot view the property and are instead purchasing the property "as is."

Bank Owned Properties – Also known as REO (Real Estate Owned), bank owned properties are properties that are not sold at public auction.

Government-Owned Property - Property financed by a government loan (such as FHA, VA, or USDA) that is repossessed by the government when the owner defaults on payments. A government-registered broker will usually be responsible for selling to recoup losses. You can find government-owned properties through the U.S. Department of Housing and Urban Development (HUD).

While there are many ways to buy a foreclosed home, not all of them allow you to buy the property without money.

How to get a loan to buy a foreclosed home?

You've found the perfect foreclosure property, but you can't afford the loan and you'd rather buy it at auction or from a bank. In addition to taking out a 203(k) FHA loan, there are two other options to consider.

Fannie Mae offers the HomePath program for first-time home buyers. You can even receive up to 3% assistance with closing costs on a foreclosed property after completing the necessary online home buying education courses. Another advantage of this loan is that it only requires a $500 deposit and eliminates PMI once you own 20% equity in the property.

Freddie Mac's HomeSteps program is a program that buys bank loans and pools them as securities to offer to investors. Foreclosed homes owned by Freddie Mac can be sold through the HomeSteps program.

HomeSteps plans are only available in the following states:

· Alabama · Florida · Georgia · Illinois · kentucky · North Carolina · south carolina · Tennessee · Texas · Virginia

The HomeStep program is unique in that it does not require mortgage insurance, which can save borrowers thousands of dollars over the life of the loan. Additionally, the loan does not require an appraisal when it is issued, which can be a huge barrier for many investors to purchase a foreclosed property.

How do I find foreclosures near me?

To begin searching for foreclosures in your area, visit your county clerk's office. This is where lenders typically file their first notice of default on a property, and where you can also request a list of pre-foreclosure properties (also called distressed properties). Alternatively, you can keep an eye out for pre-foreclosure homes in other public records.

Once you find a property you're interested in, contact the lender and ask about an unconditional mortgage. Even if a lender approves your mortgage on a pre-foreclosure home, the original owner still must agree to your request.

Foreclosure is bad for your credit, so most homeowners won't need much convincing to go along with your plan. After speaking with the property owner and getting their approval, you can begin the paperwork for the process.

For paperwork, you may need help from a real estate agent who specializes in foreclosures as you will need to make modifications to your loan assumptions.