Mortgage on Foreclosed Property?

[MedRep86]

Hey everyone!  Wanted to see if any community members had experience with obtaining mortgage on foreclosed property?  I've heard mixed things from folks, such as its normally a cash deal... or if you want to do it, best to seek financing through bank that owns deed.  Finally, its tough to pull with FHA / commercial loan.  

Just looking to see if anyone has experience with this and can share!  Ty 

[CreditCuriosity]

Although I have not much insight like yourself, but what you mentioned above sounds about right.  Auction, cash deal usually, work with bank that owns it, etc...  Be interesting to see if anyone on here really knows the process as a fairly niche crowd and usually lawyers know about al this before general public, etc.

[homeloanexpert]

@MedRep86

As someone who has originated hundreds of the loans on foreclosed properties over the last 30 years, I can honestly tell you, they are no different than any other sales transactions. In fact in some cases, I actually found that dealing with the banks was a little  easier than dealing with some private sellers. With a direction the economy is heading, don't be surprised see alot more foreclosures popping up.

[MedRep86]

Thank you for the response!  Excuse my lack of knowledge in this area, but assume I can just email the sellers (banks) agent and this is something they can freely provide?  

[ShanetheMortgageMan]

Keep in mind foreclosed properties usually are sold in "as is" condition, meaning if there is deferred maintenance (a term lenders/appraisers use to describe physical issues with the home) then it's unlikely the seller (bank) will agree to fix it prior to closing.  This may necessitate using a renovation loan so you can include the cost of making those repairs into the loan amount, which allows you to close on the home in it's current condition.  FHA has more stringent property requirements the home must meet, but also has a renovation loan option in case that is the only type of financing you're able to qualify for.

[Madein84]

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@MedRep86 wrote:

Hey everyone!  Wanted to see if any community members had experience with obtaining mortgage on foreclosed property?  I've heard mixed things from folks, such as its normally a cash deal... or if you want to do it, best to seek financing through bank that owns deed.  Finally, its tough to pull with FHA / commercial loan.  

Just looking to see if anyone has experience with this and can share!  Ty 

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My question is have the people that are saying actually purchased a foreclosure? if not - then it doesn't matter what they think. no use taking advice from people that haven't done the thing you want to do.

In terms of how to finance, it depends on at what stage of the foreclosure you are purchasing the property... 
 
If the foreclosed property is already on the MLS then you can use a regular mortgage loan. It will be a normal transaction just that the seller that the realtor will be representing is the bank. and most likely there won't be any room to negotiate for any damage to the property.
Usually, the first few days the property is listed only bids from owner-occupants are accepted. so you don't have to worry about competing with cash buyers if you put your offer in when the listing is new. 

I purchased a foreclosure using a 203K FHA loan. When I purchased,  in order for my bid to be reviewed I needed a preapproval from the bank that owned the property to verify that I really could get the loan. BUT I was not required to actually fund the mortgage through them. 

Don't listen to the naysayers. Get the foreclosure.