Buying A Foreclosed Home

Almost everyone has heard of buying a foreclosed home. The opportunity for instant equity is tremendous.

I just read a letter from Frank. I'll take you to his letter in a moment because he did his homework. But for right now here are his two questions:

Buying A Foreclosed Home And Appraisal

Question: Will the lender use the appraisal of the county as the property value, which in my case would help towards a good LTV?

Answer: The rule of thumb that establishes value for a home mortgage is purchase price or appraised value whichever is less.

For example, if a sales price is $200,000 but the real estate appraiser returns a value at $175,000, the home mortgage will be figured off of $175,000.

Conversely, an agreed upon price of $200,000 will be the basis for the lender's calculations even though it appraises for $250,000.

I have seen exceptions to this rule of thumb so consult your lender. You can also ask about using the county assessment instead of paying for a market appraisal.

Buying A Foreclosed Home And Mortgage Approval

Question: Are there any other surprises that I may be overlooking?

Answer: Eliminate surprise with mortgage approval. Ordinarily I encourage mortgage pre approval. But due to non-refundable nature of down payments following an auction, I would get mortgage approval subject only to appraisal and title insurance.

Consider going one step further. Ask your home mortgage lender if mortgage interest rate lock is available before the auction too.

The point is to reduce as much risk as possible since your down payment might be non-refundable.

Buying A Foreclosed Home And Building Your Wealth With Auctions

Have you found yourself asking...

• Are there any good real estate deals left?
• Are real estate auctions complicated?
• Where can I find current information about auctions in my area?
• How can I begin buying a foreclosed home?

Residential Construction Loans

For more of Kate's unique home buying help, go to Residential Construction Loans Explained.

You Can Ask Kate About Buying A Foreclosed Home

What if you could ask a mortgage insider about buying a foreclosed home? Now you can!

Ask Kate™ is specifically designed to answer your questions and create dialog regarding real estate and mortgage financing.

You'll also find a wealth of information at Kate's Best Mortgage Rate Blog packed with the latest additions to this website, interest rate updates and a fresh approach to real estate and mortgages.

UNIQUE Home Buying Help

Make your home buying a snap with the Home Buying Scorecard.

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Start your wealth building now by buying a foreclosed home.

The First Time Home Buyer Credit could be yours even if you have previously owned a home.

Learn the differences between Residential Construction Loans - Mortgages designed for building homes.

When private mortgage financing originates between family members, property tax and mortgage interest deductions frequently come into question.

First Time Home Buyer Advice - You decided to buy a house! What's next?

Stories From Home Buyers - Meet Kate's home buying visitors who tell their stories and give advice for buying a house.

Ask Kate About Home Buying - Ask a question to get an answer from Kate.

How To Buy A House Q and A - A complete collection of questions about home buying, each with a individual answer from Kate

The letter from Frank inspiring this page - Buying A Home In Foreclosure

Return home to Get Your Best Mortgage Rate from Buying A Foreclosed Home

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