I'm in the market for a home, but I keep hearing people having the opportunity to purchase house that were after the foreclosure process. How do I get involved in that? And who do I need to talk to?

 

After watching "the house of sand and fog", I gave up on that idea.

 

It's not as easy as those info-mercials make it out to be.

In the banking business, you see a ton of foreclosures where people sabotage the home before getting the boot. Sometimes the damage is clear, sometimes not...like submarining a sewer system, etc.

If you have a friend in the contractor biz, have them go with you to check out repos before you make a bid. Usually sherriff sales/foreclosures will be listed(Multi-listed) and give a specific date of the auction. You need to get financing before the auction, as they normally want secured funds at this point.

One important point: Most mortgage companies will not finance a repo home unless the home is in excellent shape & passes certain guidelines. Most government-secured financing(FNMA, etc) will want the home to be in liveable shape or no dice.

HUD and foreclosures can be found through regular realtors, but ask a few if they have a 'repo/foreclosure' department or specific agent. That info changes pretty quick so you want someone who is fairly involved with the process daily. My folks bought theirs at a substancial discount because the home needed all new flooring(carpet/pad, etc), had some minor sheetrock damage and some exterior repair(shingles). They went conventional, paid a bit higher rate, but have about $30K in equity with a $6K investment, PLUS, the HUD office paid 90% of their closing costs. So, it can be done, but you must be smart &&& lucky.

 

I just bought a foreclosed home in Feburary. It was an excellent buy and the home was actually in EXCELLENT condition. It so happens that the last owner whent through a nasty devorce and that is why he ended foreclosing. Out of all of the houses we looked at, this one was in the best condition.

I went through a regular realtor. He was able to bring up HUD reposesions.

 

Forclosed homes are quite amazing to tour.

 

What is that and how do I do it?

 

I think i'd rather have foreclosed land to develop homes on myself

 

ha when the bubble does burst and the rates go up there's gonna be shit load of foreclosures

 

If you pour a bottle of bleach or two down the drain, you'll certainly have a 'slow down' in the ol sewer tank...big problems there. You could also flush a bunch of paper towels/tampons, etc...that shit doesn't go away very fast...big problems there too.

Really, just about anything that is not shit or toilet paper flushed into a sewer tank will cause problems/clogs.

EDIT: Picture this: Ever watch 'The Fockers'?...remember the scene where the wedding rehearsal was about to take place & the back yard was flooded...:yuk:

 

Matelot,

Guess I don't understand your logic here. My thought is that when rates go up property values will decline hence offsetting the rate increase. Now if you an ARM you will be negatively affected but if you don't have an ARM your payment won't go up. At most you will be living in a home that has depreciated due to the rate increase. I honestly don't understand why anyone would have an ARM with rates this low though.

Please enlighten/correct me if I am wrong.

Thanks!

 

Please realize that this only applies to a SEPTIC system. If you are in a neighborhood with a sewer system (ie all houses wastes drain through the pipes into a pipe in the street that eventually drains to a wastewater plant) this is of no concern.

 

That's what I meant...DE=Boonies. Nothing but septic tanks.

FWIW...You can submarine a sewer system too...just takes bigger stuff

 

my dad has bought foreclosures before. and it does NOT mean it was trashed before it was vacated. a lot of them are foreclosed on because the owner simply can't afford it and the bank takes over. you can get involved in foreclosures either with a real estate agent with good knowledge of the market, or you can usually search on your county's website for details. they are usually in auction format when you want to purchase, and a lot of times you have to be able to pay upfront which means you have to have your financing done beforehand (at least that's how it's done in my county).

here's a sample of the foreclosure calander in my home county:
http://www.leeclerk.org/Civil_ForeclosureCalendar.aspx

hope that gives you a better idea.

 

I believe a lot of people taking loans nowadays are ARM's ??

 

how do you figure that?

enlighten me.

 

If someone has an ARM that comes into the variable term, the payment may increase more than they are willing to handle...

Not to mention the short term rate hikes and their effect on the many HELOCs people have taken out in the last 2 years or so...

 

ARM's are Adjustable Rate Mortgages.

The program lets you pay either only interest, or add principal onto it. The rate is locked in for a period. This period (usually) can range from three years to up to 10 years. After the period expires, the rate matches the market, however there are caps on how much the rate can increase.

You are assuming that everyone is getting a house by doing 100% financing, which is usually not the case. Most people right now are coming in with at least 20% of the house value in hand through some avenue.. meaning cash downpayment, or money made from the increase in equity of their other house.

At least in the DC area, the rate at which people move from house to house is ridiculous, and you are hard pressed to find someone that has lived in one property for more than 10 years.

Most people I talk to just don't want to pay more a month into a 30 year mortgage, when they know they are not going to stay there for 30 years. The current rate of appreciation greatly exceeds what someone would pay into the house on a 30 year mortgage per month.

Hope this can shed some light on the subject. I do have more info on how interest rates can change if you are in an ARM program. Let me know.

 

Many people wind up refinancing or moving before the arm hits the variable term anyway.

If people do sense a downward trend in the market, they always have the option of refinancing into a rate that is locked for a longer period, or moving to a fixed rate.

HELOCs payments are not as high as the mortgage payments, so an increase of interest rates does not affect the monthly payment as much as it would a mortgage.

Also, if you don't like the way that the HELOC rates are going, you can always refi and pay off the HELOC.

 

Pretty sure this is not the case either. If you do some poking around on the Fed Reserve or ABA site, you'll see that a vast majority of home-buyers are doing piggyback mortgages...ie: they borrow 80% for the first mortgage, but the additional funds comes from a HELOC done at settlement. Normally 80/10/10 or 80/10/5. Leverage percentages are increasing steadily.

 

If rates increase enough to make mortgage & HELOC payments uncomfortable, refinancing may not be very easy. Payments are going to jump either way. Not to mention, if you refinance a home at a higher LTV, some people who have interest-only HELOCS may have to start paying principal as well, drastically increasing their payment.

Any way you cut it, a steady increase in rates will affect the consumer bottom line & there will be people who cannot afford the new payments. Studies have shown that the average buyer(over the last 2-3 years) has over-bought because of lower rates & options like interst-only ARMS. I believe there are a few articles in this very thread that state these points.

 

I'm not going to argue with that. I'm speaking primarily from what I have noticed prior customers doing. Granted, the vast majority fall into the A paper range, so you could call them fiscally responsible, as far as not over-extending themselves for a property.

 

If one is alert to the trend of the rates, people will do something about it before they get uncomfortable with them. You are counting on the rates drastically going up, and the appraised values going down.

Again, nothing stops one from refinancing and adding the HELOC into he mortgage. This does depend on the current LTV of the house, and the person's DTI among other things. I'm just saying it's possible, that's all.


Agreed, overextending does happen. If you are buying a house based on the fact that you can afford it on a 5/1 I/O, and not a penny more, that is unsound financial decision. At that point, you should be prepared to move into a cheaper place.

 

You're giving people too much credit...Most will only move if you poke them.

 

I know.

It's sad.. most consumers are not very saavy when it comes to important financial decisions.