| Buying foreclosure property can yield substantial | | | | and costly details are taken care of. Many states |
| savings, as long as buyers understand how to | | | | include a redemption period for properties sold through |
| capitalize on available options. Most people are familiar | | | | auctions. If foreclosed property owners are capable of |
| with buying houses through foreclosure auction, but this | | | | paying off the outstanding loan balance they have the |
| is not always the best approach. | | | | option to buy the house back from the winning bidder. |
| Foreclosure property sold at public auctions often has | | | | The possibility for owners to reclaim their property is |
| two or more mortgage loans attached. Real estate | | | | eliminated when buying houses through banks. |
| auction prices are established based on the balance | | | | The downside of buying bank owned foreclosures is |
| owed on the first mortgage. Buyers are responsible | | | | mortgage lenders rarely reduce the purchase price. |
| for conducting due diligence to determine if additional | | | | Buyers often compete with multiple buyers and should |
| mortgages, tax liens, or creditor judgments are | | | | be prepared to submit their highest offer. The |
| attached. If so, buyers must engage in negotiations to | | | | exception to obtaining reduced prices through banks is |
| pay off outstanding balances in order to take | | | | if substantial repairs are noted in the home inspection |
| possession of the property. | | | | that was not recorded when the real estate was |
| Another drawback of buying foreclosure property | | | | initially repossessed. |
| through auctions is buyers are usually required to | | | | One option to buying foreclosure property though |
| provide funds within 24 hours of submitting the winning | | | | banks is Fannie Mae's Home Path Mortgage program. |
| bid. This may not be a problem for investors who buy | | | | In addition to offering discounted real estate, Home |
| homes with cash, but can be challenging for first time | | | | Path provides special financing options for buyers with |
| home buyers or those purchasing foreclosure property | | | | bad credit, along with a low down payment |
| as a second home. | | | | requirement of 3-percent. |
| Most people who buy houses at auction obtain | | | | Many real estate investors are turning to Fannie Mae |
| preapproved financing through their mortgage lender. | | | | foreclosures because these properties often qualify |
| Others take out a home equity loan using their primary | | | | for grants under HUDs Neighborhood Stabilization |
| residence as collateral to secure the loan. This | | | | Program. Individual buyers and investors can apply for |
| strategy can place buyers' primary residence at risk | | | | NSP grants when purchasing real estate in areas that |
| for foreclosure. | | | | have high foreclosure rates. |
| Instead of attending foreclosure auctions, many people | | | | Combining NSP grants with Home Path's low-interest |
| are now looking at buying bank owned real estate. | | | | and low down payment loans allows buyers to |
| These properties encompass foreclosure realty that | | | | purchase real estate at substantial savings. Details |
| did not sell through auction. When banks retain | | | | about Fannie Mae's Home Path Mortgage program |
| ownership they sometimes make repairs to return the | | | | are available at |
| home to livable condition or make it more marketable. | | | | Buying foreclosure property is not without risk. Anyone |
| However, properties are sold in as-is condition and any | | | | planning to buy foreclosed homes as a primary |
| work performed is not covered under home warranty. | | | | residence or investment property should become |
| One of the biggest advantages of buying bank owned | | | | familiar with the pros and cons of buying distressed |
| vs. foreclosure properties is real estate owned by | | | | real estate. |
| banks are sold with a clean title. Not only does this | | | | The primary goal is to buy houses well below market |
| save buyers money, it also allows them to take quick | | | | value, make necessary repairs, and either obtain |
| possession of the property. | | | | instant home equity or quickly sell the property for |
| Bank owned real estate is usually priced higher than | | | | profit. Buyers must conduct due diligence to ensure the |
| homes sold through auction, but all the time-consuming | | | | home is actually a good deal and not a money pit. |