Are those home foreclosure companies for real?
Question:
I am of course expecting dilapidation-not so nice area, etc. But is it possible to become a homeowner this way?
Answer:
The devil is in the details.
When buying a home that is in foreclosure the borrower/owner is still the owner. If they agree to let you take over the payments and not provide them with anything else then you can step in for the cost of the monthly payment.
Note that they contractually have agreed not to do this when they signed their loan. The lender has the right to call the loan due if someone else takes over. As the process to take over the loan does not formally ask the lender to assume the loan the lender might not notice. Or they might choose to not take action (that is also their right) if the payments continue to be made on time.
To step into someone else's shoes who is in foreclosure you likely have back payments to make up if the foreclosure is to be stopped. Hence there could be the need for a lump sum to be paid. Not a down payment but still a good deal more than one month payment.
There also might be back taxes which will eventually have to be addressed or the lender will take action by foreclosing.
While there is no free lunch there are different ways to become the owner. The above way solves a specific problem. It is not really clean in that the old owner (who you purchased from) is legally still on the loan yet no longer own the property that secures the loan. Some people agree to such a deal because it is the lessor of two evils (loan that they owe on which someone else is paying or a full foreclosure on their record). If you make the payments as agreed for 1-2 years and then refinance to pay off the loan the seller who was on the loan actually benefits in terms of their credit rating.
Yes, And you don't always have to have a downpayment to buy a home. I didn't have one. I got with a company that does special loans that give you a 2nd mortgage for the 20% so you don't have to pay PMI. I also work in a department that does Foreclosures and yes, they sell those houses.
If a deal sounds too good to be true, it probably is.
You do not need to go through a company to purchase a foreclosure home. You can either deal with a servicer directly or you can find out about foreclosure sales in your area in your local newspaper and bid on them at the sherriff's office, county court steps, or other officialy designated place. They usually give the instructions for bidding right in the newspaper.
I am not familiar with purchasing foreclosed homes without a downpayment. I have worked with HUD, and if you purchase the home as an investor, 10-20% down has been the norm that I have seen. Now if you are purchasing the foreclosed home for your primary residence, than it is possible to get into the house for 0-3% down if you go FHA. And if you can get in with out any down, there are still closing costs to consider. About 3-5K in my area.
Be careful. I was forclosed on due to job loss. Many, many
problems with house including flooding basement, black mold,
leaky ceiling, much more. Mortgage company new, but did not
disclose to new "buyer" and suckered him out of thousands.
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