Finding and financing pre-foreclosures


How can you do it?  It's simple!

  • Find and locate mortgage loans in default.
  • Contact homeowner and bank.
  • Find out what homeowner and bank need and assess their motivation.
  • Obtain information on prices of similar houses in the neighborhood to determine the price that you will offer after calculating the closing costs and your profit.
  • Get more information on pre-foreclosure procedure in your state.
  • Each state has its own foreclosure procedures in which pre-foreclosure procedure also takes place. Find the foreclosure law applicable in your state to start. Determine whether you are in a judicial or non-judicial state. Also determine if your state has right of redemption.

How can you find pre-foreclosures?

There is less competition in buying pre-foreclosures than there is when buying at foreclosure auctions. Some people do not know how to find pre-foreclosure or probate house opportunities and some people fear dealing and negotiating with lenders.

How much time do you have?

  • You can find the best buys by contacting homeowners before the lender takes over. You can make arrangements with homeowners and lenders to make both parties happy while you get a good deal.
  • You can act to make an agreement from the listing day until the property is offered for sale at auction. This may take about 90-120 days in different states.

Advantages for all parties

Lender and the home owner are motivated to resolve the default situation at pre foreclosure phase. Here are some of the reasons motivating the parties involved:

  • You "quit claim" the property and take over the mortgage payments. Now, you own a real estate property at much below market prices.
  • Previous owner is relieved of his debt and stays sound financially. You are helping the troubled homeowner.
  • Bank is happy to have a new borrower who is in better financial status. You rescued the mortgage loan.

Lease Option To Purchase

Rent to Own, Lease to Buy with our Lease Purchase Program

  • You want an easy way into the housing market
  • You want your rent money to do more than just pay your rent!
  • You want to enjoy your own home rather than rent
  • You have a temporary credit problem that you need time to repair
  • You need time to save for a down payment

If you answered ‘yes’ to any of these, then you need to consider a lease purchase agreement.

What is a Lease contract?

A lease contract is an agreement, usually written, between the owner of a property and a renter who desires to have temporary possession of the property. As a minimum, the agreement identifies the parties, the property, the term of the rental, and the amount of rent for the term. In addition to the basics of a rental (who, what, when, how much), a housing rental may go into much more detail on these and other issues.

What is an Option contract?

An option contract is defined as "a promise which meets the requirements for the formation of a contract and limits the promisor's power to revoke an offer."Or, quite simply, an option contract is a type of contract that protects the individual making the offer (the offeree) from a seller's (the offeror) ability to revoke the contract.

What is a Lease Option To Purchase

A Lease Option To Purchase contract combines a basic lease contract with an option to purchase contract, which creates a Lease Option To Purchase contract .

Understanding the Short Sale Process

  • When housing prices in many parts of the country were booming a couple of years ago, there wasn’t much national attention given to short sales. But with the current subprime debacle and increasing mortgage delinquencies, many people are wondering if the short sale process is a way to avoid foreclosure.
  • Basically, the definition of the short sale process is when the lender of a property allows the property to be sold for less than the amount due on the mortgage loan.
  • The obvious benefit to the short sale process is that it allows the seller to avoid the credit report damage associated with a foreclosure. A foreclosure can stay on your credit report for up to 10 years and can take an emotional and financial toll on you and your family.
  • But the pitfalls of the short sale process should be considered as well. The I.R.S. may consider any debt forgiveness as taxable income, thus resulting in a tax liability. In addition, lenders can often pursue a borrower for the deficiency balance (the difference between the amount owed and the amount paid).
  • In some cases you may be able to avoid taxation if you can prove you are insolvent. But if insolvency is unsuccessful, and you are faced with a tax liability resulting from the deficiency amount, it may make more financial sense for you to let the lender foreclose.

Subject to financing

"Subject to" financing is where a homeowner sells his home but leaves the existing financing in place and allows the new owner to continue making the monthly payments. The deed is always transferred at this time to another owner who will be making the payments.

The transfer of ownership violates the loan's "Due on Sale Clause". So payments MUST be paid on time.

"Subject to" financing can work, but there are substantial risks to the homeowner, any tenants and the lender. So check any documents with your attorney.