Why buy a Foreclosure?

What is the big deal about government foreclosures?

Four percent of all homes sold in the United States will eventually go to foreclosure. There are several types of foreclosures and we will explain the process, pros and cons of each here on Allhud.com

Divorce, loss of employment or loss of life are the most common reasons for a foreclosure to occur. When one of these three things transpire and the home buyer is not adequately prepared a foreclosure is most likely to be the end result. Soon after one of the big three occur the homeowner is several months behind and the mortgage holder will not negotiate with the homeowner as special exemptions cannot be made for every home owner going through difficult times. It seems evil and possibly oppressive but very often a foreclosure can be the best thing for the homeowner. Removing the pressure and allowing the homeowner to potentially live in the house for several months free of charges.

What Are VA Foreclosures?

Benefits of buying a VA foreclosure

1. No money down possibilities.
2. Instant Equity.
3. No mortgage insurance ever.
4. Higher qualifying ratios.
5. VA will pay all closing costs (up to 6% in some states)

Understanding Veterans Administration Foreclosures
Homes designated as VA Foreclosures were last purchased with a Veteran's Home loan. This means that the past purchaser was a Veteran of one of the branches of the United States Military and that the previous mortgage was made possible by the Federal Government who guaranteed the loan. By guaranteeing the loan the Department of Veterans Affairs (VA) agrees to repay the Lender for all money lost by the lender in case the property is foreclosed on. It’s a good deal for the Lender as their investment is 100% guaranteed. The Federal Government protects itself by charging each buyer of a VA mortgage a Funding Fee. The Funding Fee is a percentage of the mortgage amount and is helpful in several ways.

Because the Funding Fee is charged the Veterans Administration can allow the Veteran to purchase a house with no money down. By purchasing a VA foreclosure from the list of Veterans Administration foreclosures found on USHUD.com you can preceed with the loan as though you are a Veteran and buy many of these properties with no money down and without mortgage insurance.

Each property has it’s own financing options. For the best information on a purchase strategy for the particular property you are interested in, contact Jeff at (810) 691-9819.

What is a HUD Foreclosure?

Benefits of buying an FHA Foreclosure

1. No Appraisal required
2. Instant equity
3. Flexible Credit requirements
4. Low money down.
5. HUD will pay all closing costs. (Up to 5%)

Understanding HUD Foreclosures

If the house you are interested in is a Housing and Urban Development (HUD) foreclosure, then it was last purchased with an Federal Housing Administration (FHA) mortgage. The Federal Government insured the loan, making the previous FHA loan possible. By insuring the loan the Federal Government agrees to repay the Lender for all money lost by the lender in case the property is foreclosed on. It’s a good deal for the Lender as their investment is 100% insured. The Federal Government protects itself by collecting on each transaction of a federally financed property a Mortgage Insurance Premium (MIP) at the time of purchase. The MIP is 2.25% of the mortgage amount and is helpful in several ways.

Because the MIP is charged, the FHA can allow a purchaser to reduce their initial out of pocket cash expenditure from 5% to 3% of the purchase price, making it possible for many more Americans to buy homes. HUD reports in their mission statement that home ownership for the majority of Americans is their goal and that has proven to be the driving force behind their decisions and directives since their inception.

The MIP is pooled with all the other premiums and allows the Federal Government to continue helping homebuyers save money on their homes by keeping the costs down for homebuyers.

Most importantly to you, the MIP paid by all the prior home owners allows HUD to sell the foreclosed inventory presented here at a substantial discount.

Each property has it’s own financing options. For the best information on a purchase strategy for the particular property you are interested in, contact Jeff at (810) 691-9819.

What Are Bank REO (Real Estate Owned) Properties?

REO is the acronym for Real Estate Owned. This indicates that the bank and or lending institution is currently holding the property in their current inventory of homes which have been foreclosed upon. Every bank that holds mortgages will eventually have to foreclose on a certain percentage of homes. These properties are not with in the revenue stream of any bank but instead represent a loss on a loan. Banks are not in the real estate business, banks are in the mortgage business and therefore must liquidate these homes as quickly as possible.

In the pursuit of an ultimate liquidation the bank will have the property listed by a local real estate agent and begin the process of marketing the home.

The bank can not accept a loss on the property without first showing that they have done the best job possible in marketing the property as a bank unlike the federal government is in the business of be profitable. Banks regularly lose money on property they are forced to foreclose upon but attempt to limit the loss as much as possible. Many banks and lending institutions offer higher price ranges of properties than government institutions and this can work to your benefit if you are looking for real estate above the governmental limits of your area.

Most Bank REOs have a third-party manager who is responsible for the upkeep of the property while the bank owns it, and they are your liason with the bank. Offers must be made through them, and they will relay counter-offers from the bank. In general, banks do not negotiate much on prices, so if you offer less than asking price be prepared to go through the negotiation process several times for a minimal discount.

USHUD.com obtains its bank REO lists from the following sources:

• Bank of Ocwen (Residential Properties)
• Bank of America
• First Union Bank (Property Finder)

Each property has it’s own financing options. For the best information on a purchase strategy for the particular property you are interested in, contact Jeff at (810) 691-9819.