Beginner Investor - Foreclosure Questions

Foreclosures, Short Sales, Tax Foreclosures
1

Hello! A friend and I are going to invest in a foreclosed house, I’m currently a newbie and I’m still researching but am still unclear of the process. We have never owned a home, currently have car payments and credit scores around 600… I have a few questions to ask about the foreclosure process, I just don’t want to get burned trying to get my foot in the door.

If we plan on buy a foreclosed house that is going for $80,000 – as listed, but is assessed for $100,000, could you give me an idea on how much the downpay and closing costs would be? (general figures for the house amt) Is it possible to have no downpay and only pay for the closing costs?

What type of loan should we go for since this is for investment purposes?

To my knowledge, we need to Pre-qualify for the loan, can this done for over the amt of the house? IE, house is $80k, can we get $90k pre-qualify and use it all on the cost of the house?

After we pre-qualify – we select a house we would like to purchase, and then have an appraisal done to the house, correct? I’m a little foggy on what happens afterwards… can anyone lend their advise? It is greatly appreciated for any help!

2

You should find a lender that is familiar with rehab loans (I’m assuming that the house needs work since you say it is listed for $20k less than it’s assessed value). They can give you the figures you are looking for as far as down payment and closing costs. Also, you may want to find an agent in your area that has experience with REO properties. They can help answer any questions you have including what the value of the house will be once it is repaired.

3

If we plan on buy a foreclosed house that is going for $80,000 – as listed, but is assessed for $100,000, could you give me an idea on how much the downpay and closing costs would be? (general figures for the house amt) Is it possible to have no downpay and only pay for the closing costs?

This is a good ruff estimate I would plan on around 3-5 % and when I do my figures when I am investing I always use the 5% so I would have the worse case built in to my figures and this includes everything so if you are going to have seller concessions then of course you would deduct that from your %.

What type of loan should we go for since this is for investment purposes?

Well this is a loaded question it all depends on whether you want to flip, buy and hold, how long you plan on holding, what your cash flow needs to be, if you want a fixed rate, adjustable or interest only,

What kind of income you can show or do you need to go stated.

This is just to name a few of the variable that need to be considered when you purchase a loan.

To my knowledge, we need to Pre-qualify for the loan, can this done for over the amt of the house? IE, house is $80k, can we get $90k pre-qualify and use it all on the cost of the house?

Yes you do need to get pre qualified and yes you can get cash out at closing but it needs to be set up right other wise in could be considered lender fruad. you are only askin for 10k and this can be worked into you contract to get it back through using it to rehab the house.

After we pre-qualify – we select a house we would like to purchase, and then have an appraisal done to the house, correct? yes, always

I’m a little foggy on what happens afterwards… can anyone lend their advise? It is greatly appreciated for any help!