Are you looking to purchase an affordable home? If so, you may be thinking of whether to go for a pre-foreclosure home that will allow you to get an excellent deal. If you’re new to this, it is vital to understand what a pre-foreclosure home is and how to buy one.
So, with that in mind, let’s talk about what a pre-foreclosure home is, how to find one, and what you should be doing to buy one properly:
What Is a Pre-Foreclosure Home?
As the name suggests, a pre-foreclosure home is a house that’s likely to undergo foreclosure. This means that either the homeowner has not been able to make their monthly mortgage payments, or they may not have been paying at all.
An investor can purchase a house before it’s foreclosed on, collect rent and then sell it when the property goes into foreclosure. By doing so, they’ll be able to purchase a home at a very low price, which they can then use to find renters online. As we mentioned, this is a process that’s very simple to execute, but you should know that there are many risks that go along with it, so proceed with caution.
How Do You Identify a Pre-Foreclosure Home?
The first thing you need to do is to find out the public records number of the homeowner and find out the lender’s name, who is the house’s current owner. This will be very useful in determining the status of the house.
Then, you’ll need to look for the errors in the filing and the reason why the homeowner is in default. Many homeowners who default will have to deal with tax liens and foreclosures, and mortgage investors’ liens.
In most cases, you will be able to find a bank that is willing to sell the home to an investor, and the investor may be in a position to purchase it below-market rates. If you’re successful in your negotiations, you will be able to purchase a home at a much lower price.
How Do You Secure a House before It Goes into Foreclosure?
In order to secure a pre-foreclosure house, you will have to establish contact with the lender who is currently in possession of the property. You’ll then be required to explain your situation and how you’re prepared to make monthly payments to them.
In case you are successful in your negotiations, you’ll be given a conditional offer to purchase the home. At this point, they’ll be able to give you the closing date and will usually charge an escrow fee for this.
So, there you have it. If you’re looking to purchase a home at a very low price and at the same time make an investment, this is a process that can be very lucrative for you. However, you must realize the risk you’re getting into. Buying a pre-foreclosure home is risky, and you must be prepared to spend time ensuring the buy is the right one!
Hawkins Home Loans is your go-to online resource to get the loans you need to purchase your dream home. If you are looking for home loans in Sacramento, CA, check out what we have to offer.