With sharply higher mortgage rates comes an increase in home foreclosures as homeowners find that th
With sharply higher mortgage rates comes an increase in home foreclosures as homeowners find that they simply ca ot afford the higher mortgage payments. Worse for them, no mortgage company will allow them to refinance if their credit standing is precarious. Thus, the number of foreclosures is rising acro many housing sectors elling o ortunity for savvy home investors. Are you ready to jump in? If so, it i t always thing to do, but it can be done as outlined below.
Chances are if a homeowner is faced with a foreclosure, he may be receptive to you offering to buy his home to rescue him from what will inevitably be a credit killing experience. If you play it right, you could offer to take over payments or simply buy the home at a price that covers what is owed on the mortgage. In effect, the owner loses his down payment and equity in the home, but he gets to keep his all important credit rating and he will have the o ortunity to purchase a home again once his finances straighten out.
On the other hand, if a homeowner is seriously behind on payments and the homes value has not kept up, his mortgage lender could squash any deal that you make. The mortgage company could end up losing te of thousands of dollars on the sale, e ecially if your offer doe t pay off the outstanding mortgage. Yes, the homeowner is re o ible for the loan deficiency but if he doe t have the money now, what is the likelihood he will have the fund later? In that case, the mortgage company may authorize that the courts proceed with a foreclosure to remedy the situation.
A compromise plan could have you still buying the home if your offer effectively is almost enough money to cover the outstanding mortgage. If it falls lets say five thousand dollars short, the mortgage company could be interested in entertaining your offer. Why is that? For several reaso including:
--Foreclosure proceedings are expe ive. The mortgage company must hire a lawyer and pay filing fees. In addition, thousands of dollars in late payments could be lost forever. Your deal would recover some of that money.
--Property management is a pain. If the home is recovered via foreclosure, the mortgage company must still maintain it until it is sold. Taxes, maintenance, repairs can add thousands more to the cost of the home.
Also, if the local housing market truly stinks then your offer may be the only one that a mortgage company could expect. Therefore, understand the market and set your offer at a price to make the most of your benefit.
Chances are if a homeowner is faced with a foreclosure, he may be receptive to you offering to buy his home to rescue him from what will inevitably be a credit killing experience. If you play it right, you could offer to take over payments or simply buy the home at a price that covers what is owed on the mortgage. In effect, the owner loses his down payment and equity in the home, but he gets to keep his all important credit rating and he will have the o ortunity to purchase a home again once his finances straighten out.
On the other hand, if a homeowner is seriously behind on payments and the homes value has not kept up, his mortgage lender could squash any deal that you make. The mortgage company could end up losing te of thousands of dollars on the sale, e ecially if your offer doe t pay off the outstanding mortgage. Yes, the homeowner is re o ible for the loan deficiency but if he doe t have the money now, what is the likelihood he will have the fund later? In that case, the mortgage company may authorize that the courts proceed with a foreclosure to remedy the situation.
A compromise plan could have you still buying the home if your offer effectively is almost enough money to cover the outstanding mortgage. If it falls lets say five thousand dollars short, the mortgage company could be interested in entertaining your offer. Why is that? For several reaso including:
--Foreclosure proceedings are expe ive. The mortgage company must hire a lawyer and pay filing fees. In addition, thousands of dollars in late payments could be lost forever. Your deal would recover some of that money.
--Property management is a pain. If the home is recovered via foreclosure, the mortgage company must still maintain it until it is sold. Taxes, maintenance, repairs can add thousands more to the cost of the home.
Also, if the local housing market truly stinks then your offer may be the only one that a mortgage company could expect. Therefore, understand the market and set your offer at a price to make the most of your benefit.
