Getting a Mortgage on a Foreclosure/Bank Owned Home – CAN IT BE DONE???

Getting a Mortgage on a Lehigh Valley Foreclosure/Bank Owned Home – Can it be done??

Yes!  All Day long…The question is what type of mortgage can you get?  That is the question.

When dealing with any type of large purchase you should make sure that you are working with experienced professionals all the way around.

Real Estate Sales – Is a sales business but you should weed through those fast talking sales type personalities…and look for a Real Estate agent that works more like a Real Estate Consultant instead.

This is one of the largest purchases a person makes in their life – I do not care how much you spend but next to buying a car and getting married this is the 3rd most expensive investments and just as stressful as the rest.  Interview and ask questions – make sure you know who you are working with before you make a written commitment to work with them.

Okay – So, what kind of loans can you get on a Bank Owned/Foreclosure? Well, It Depends!

Let’s talk about Residential Owner Occupied properties in this Blog.

It depends on what type of loan you are looking for: The best way to think about this is, How much do you have saved to buy a home? Are you looking to purchase a home with the least amount of money out of pocket? Do you want to avoid paying mortgage insurance?

1) I always ask my buyer’s are you looking for the least out of pocket type of loan? If so, then there are a few options.  There is the typical FHA loan and this is a loan for owner occupied properties – with this loan you only need 3.5% down and if the property you want to purchase has a bad roof or mold in the basement or even the cooper piping has been ripped out – you can get an FHA 203K Rehab loan and you will be set.

2) If you are looking for purchase a home anywhere above North of Coplay, west of Macungie, North East including Bath and above than the property may be eligable for USDA Rural Housing loan which is 100% financing. This means you do not have to put anything down to get the loan like with FHA you must put 3.5% down to get the loan.

3) If you have saved money for your purchase and/or you are selling a home and plan on putting a significant amount of money down on your purchase then you best bet is a conventional loan – There are less restrictions on this type of loan but depending on the condition of the property you still may need a renovation loan.

4) Are you a First Time Home Buyer? Do you find it difficult to save money and will you have less then $5000 in savings/checking but you can pay your monthly obligations on time and you currently live in Lehigh County and want to purchase a home in Lehigh County -Depending on your Family household monthly income, you could qualify for a special program through the Neighborhood Housing Services of the Lehigh Valley – They work with 2 local mortgage companies that will help you with a 2nd loan that will give you 5% down and 6% closing costs necessary to purchase a home.  If you keep the home for 5 years – this loan will be forgiven!! There are also programs for Northampton counties but no loans are forgiven there.

Sometimes – repairs needed are unknow until you have a professional home inspector out to the property you plan on purchasing – When you make an offer on a property you typically have a minimum of 7 to 10 days to conduct due diligence or inspections to make sure there isn’t anything about the property that you do not accept – an unknown material defect like Mold, Roof, defective Heating, plumbing systems etc.  Basically, anything that is going to cost over $2000.00 total to replace/repair.

Looking for More Details: Click here Lehigh Valley Down payment and Closing cost assistance programs.

Hope this Blog was helpfu.


10 Things to know about Buying Foreclosures

10 Things to know about Foreclosures in the Lehigh Valley Area – Thinking about Buying a Foreclosure, Bank owned, REO or Short Sale Property? Things you need to know first.

Foreclosure’s can be a great opportunity for a Home Buyer to get a property at a discounted Price.

BUT Before just jumping into this head first and ONLY looking for a Foreclosure to purchase…let’s make sure you know some details about buying a Lehigh Valley Foreclosure.

1) Typically a Foreclosure has been vacate for about 1 year BEFORE it has become available on the MLS for you to purchase. Typically, Foreclosures are sold & Listed at 20 to $30,000.00 under current Market Value.  Some are more and some are less.

2) Over 75% of the Time the Utilities in the property have been turned off and the home has been winterized. So, Bring a Flash Light to your showing 🙂

3) Not all Foreclosures can get financed by the standard FHA or Conventional Loan BUT can get financed by using an FHA 203K Streamline Loan.

4) The buyer will be responsible for turning on all the utilities in their own name to conduct any Buyer requested home inspections and leave the utilities on for the Mortgage appraisal, Homeowners Insurance Company Inspection and Municipal Resale inspection, if required.

5) The buyer will be responsible for ordering and paying for the Municipal Resale inspection for the purpose of getting a clear certificate of occupancy from the Local Municipality and also be responsible for any repairs that come up on this report.  These repairs do not need to be completed prior to settlement but usually will need to be completed and the property reinspected between 30 days and 1 year from the purchase date.

6) You can have your Real Estate Agent setup a search on the Lehigh Valley MLS to ONLY search for Foreclosured properties if you would like.  Just ask them to search the special condition of Bank Owned and this will accomplish your goal.  Today: 11-7-09 there are 247 Bank Owned Properties for sale in Lehigh and Northampton county.

7) Foreclosures come in the form of several different names: Bank Owned, REO “Real Estate Owned” , Foreclosure, HUD owned.  Depending on the type of Foreclosure and the Bank who owns the Home, will depend on the process in which you will be required to make your offer
and also the additional addendum’s you will be required to sign.

8) Foreclosures can take anywhere from 2 to 6 weeks just to get a reply from the bank.

9) Banks do prefer to have cash transactions, then conventional loans, then FHA loans.  But, do not be afraid to give it a shot if you are interested in a foreclosure…the worst thing that could happen is that your offer does not get accepted.  When your offer is going through the reply process and You are waiting on an reply to your offer from the bank…I suggest you keep watching the market just in case your offer does not get accepted.

10) Not all Real Estate Agents like working with Selling Foreclosed Properties.  So, make sure when you are looking for  a Buyer agent that you find out what types of properties they will help you purchase.

LAST NOTE: A Short Sale is NOT a Foreclosed Property.  A short Sale is a pre-foreclosure…this is when a homeowner trying to avoid the foreclosure process by conducting a short sale on their property.