Foreclosure loans – Bad credit loans
Home mortgage equity loans for foreclosures – Loans for people with bad credit
Sources of foreclosure loans
- Use the equity of your home for foreclosure loans (interest paid on it is tax-deductible).
- Assume a seller’s mortgage loans
- Ask for the seller’s financing
- Use life insurance (cash value)
- Secure a foreclosure loan using stocks and bonds as collateral without selling them
- Create cash value from company profit sharing or saving plans
- Obtain private foreclosure loan insurance (PMI) to finance part of down payment
- Apply for a foreclosure loan from: (1) commercial banks, (2) mortgage lenders (3) savings banks (formerly savings & loan associations), and (4) credit unions
- Consider an FHA loan (insured by Federal Housing Administration) with 3 percent down payment or VA loan (guaranteed by Veterans Administration) with no down payment, if you are eligible.
Pre approval strengthens your bargaining power in buying foreclosures and fixer upper homes
There are many lenders who will be happy to work with you to pre-approve you for home mortgage loan, equity or second mortgage loan, home improvement loan or refinance.
You will be able to negotiate with sellers as a “cash buyer” to lower prices and obtain more favorable terms in the contract.
Many sellers waste time due to failure of some buyers to obtain mortgage financing. This means financial losses for them. By receiving your “pre-approval letter” from a lender you give the seller a “peace of mind.” You win and the seller wins.
You need home mortgage loan pre-approval to buy HUD-owned foreclosures
U.S. Department of Housing and Urban Development (HUD) requires that you have a pre-approval letter valid for 60 days at the time you make an offer to buy one of their foreclosure properties.
You not only get a chance to find foreclosures and fixer-upper homes but also get a chance to obtain financing from the U.S. Government to finance your purchase and get a loan to fix up the property. In general HUD indicates how large of a loan you may get for repairs based on the condition of the home.
Getting pre-approval is easy
Many mortgage lenders have their underwriters approve their mortgage lending online. In turn, they can let you know whether you will be pre-approved in a couple of days. You may obtain your pre-approval from:
- your local commercial banks;
- local private mortgage lenders; and
- online private mortgage lending firms
Most lenders do not charge for pre-approval. However, some may ask you to pay $35-$50 for credit report.
How to choose foreclosure loans?
Find lenders for all your needs for foreclosure loans (new home purchases, second trust, 125% home equity financing, and less-than-perfect credit status). Contact at least three lenders to find a low-interest and low-point home mortgage loan.
Foreclosure loan collateral
One major difference in the real estate business is existence of collateral. The lending institution does not depend your signature but has collateral (your foreclosure or fixer upper property) in case you don’t pay.
You cannot correct your bad credit by yourself. Your bad record can only be deleted by the source of such information. So, you should work with your previous creditor.
HUD is on your side!
In some cases HUD insures loans for people who have had credit trouble and do not meet standard credit requirements to buy low cost homes. You need to come up with 3 percent down payment. HUD includes closing costs in the mortgage.