Buy Foreclosure House: What You Need to Know about Purchasing Pre-Foreclosures

Foreclosures, foreclosures, foreclosures – you can’t turn on the news without hearing about it. And, as you’ve always wanted to invest in real estate, you figure, “I’m ready to take the plunge; I want to buy bank foreclosures.”

If you’re ready to roll up your sleeves and put in some work, here is one way to buy a foreclosure – and perhaps help out a struggling homeowner at the same time.

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What is a Pre-Foreclosure?

In case you don’t know, pre-foreclosure is the time span between when a homeowner (borrower) becomes late and when the property is officially foreclosed upon by the lender. This time period can be anywhere from a few weeks to a year or more. It all depends on the foreclosure laws of the state/county involved – and these vary widely.

Many struggling homeowners are happy to speak with investors (you), as they desperately want to sell before they are officially foreclosed on. This is especially true if they know that there is no hope of hanging onto their home. And, this means opportunity for investors because they can purchase a property directly from the owner before the bank forecloses.

Foreclosure Properties for Sale: How to Find Pre-Foreclosures to Buy (Locate Foreclosure Lists)

Finding pre-foreclosure properties for sale is easy and can be accomplished in a number of ways, ie:

Public Records of Foreclosure Listings: As home ownership and default info is part of public records, all you have to do is research public notices in your area. This can be very time consuming, but if you’re in no rush and plan to make real estate investing part of your financial portfolio, it can be worth the time invested.

Online Sources of Foreclosure Lists: There are so many sites online that offer information on pre-foreclosure properties for sale. Be careful when purchasing, as the information can be incomplete, outdated and just downright useless.

One of the most reputable sites on the web for purchasing any kind of real estate-related info is RealtyTrac.com.

Realtors a Great Source for Foreclosure Listings: If you know a realtor, you’re in luck. They are a great source for finding pre-foreclosure properties for sale for they have access to the MLS (Multiple Listing Service). This database can only be accessed by licensed realtors.

It is the primary data system that most real estate agents use to market and sell property. Three-quarters of all properties sold are located and sold via the MLS.

Bank Websites Have Foreclosure Listings: Many banks –especially the larger ones — list their properties (REOs) for sale on their website.

Property Preservation & Management Companies List Foreclosures: Just like banks, many of these will have foreclosure listings on their websites.

Steps to Take to Buy a Pre-Foreclosure

The process can be involved, but basically you would take the following steps:

(i) Locate Lis Pendens: A lis pendens is a written notice that a lawsuit has been filed concerning real estate, involving either the title to the property or a claimed ownership interest in it. The notice is usually filed in the county land records office. Source: Wikipedia.

(ii) Find Financial Info about Property: This would include finding out about how much is owed on the property and which bank holds the note (the mortgage loan).

(iii) Determine Your Offer: You would do this by finding comps to get an idea of what the house is worth. You can hire an appraiser, or if you have a friend who is a realtor, get them to give you info on sales from the MLS.

Don’t forget to figure in your costs associated with the purchase, ie, closing costs, realtor fees (if you use one), appraiser fees, etc.

(iv) Contact Homeowner: Once you know all of this info, it’s time to contact the homeowner(s).

Now, this can be a little sticky because this is undoubtedly a very stressful time for the homeowner(s). They may or may not be receptive to your offer. Hence, it’s best to send them a letter instead of calling – at least at first.

Remember to approach them in an “I’m here to help” manner instead of an “I’m in this to make a profit” manner.

Buying Pre-Foreclosures: The Right of Redemption Law

Note: Does your state have a “Right of Redemption” law? If so, you need to be careful about buying pre-foreclosures. Basically, this law allows homeowners “reasonable opportunity to reacquire the property, provided certain guidelines are followed.”

For an example of how these laws read, see one county in Georgia’s Right of Redemption foreclosure law.

Foreclosure Laws: Don’t Buy a Foreclosure Until You Know the Laws of Your Jurisdiction

Each state and local municipality has its own set of foreclosure laws. Know them before you make any real estate investment – whether you’re buying it in pre-foreclosure, as an REO property or from the steps of a courthouse auction.

P.S.: Buy cheap foreclosures and build a real estate fortune!

P.P.S.: Found this post informative? Follow Foreclosure Business News on Twitter.

Learn more about how to find preforeclosures for sale from this founding member of RealEstateInvestor.com.

Copyright © 2009 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.

2 Foreclosure Options for Homeowners with Little or No Equity in Their Homes

Today’s foreclosure crisis is exacerbated by the fact that many homeowners don’t have any equity in their homes. You see, if you have equity, most likely you can refinance your home loan. But, what if you’re upside down? What if your home appraises at less than what you owe on it? Following are two foreclosure options if you’re a homeowner in this situation.

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Short Sale: A short sale is when you sell your home for less than what you owe on it. Your next question is probably, “but won’t I owe the balance that’s left on the mortgage?” The answer is, “it depends.”

You can do a shore sale with “no recourse.” This simply means that the lender agrees NOT to come after you for the balance due (the deficiency). Whether or not your mortgage holder agrees to this will depend a lot on your financial circumstances and who the lender is.

Learn more about short sales in this detailed article on MortgageNewsDaily.com.

Loan Modification: Basically, a home loan modification is when your lender agrees to “modify” your existing mortgage terms to lower your monthly mortgage payments.

This is becoming a popular tool in today’s foreclosure-ridden market. A loan modification is worked out between you and your mortgage holder. The loan modification you get depends on many factors, ie, your finances, how late you are, who your lender is, the real estate market in your area, etc.

Learn more about mortgage loan modifications and get answers to the most frequently asked questions about it.

Foreclosure Options: Common-Sense Advice for Today’s Underwater Homeowner

Today’s turbulent market can actually work in your favor if you’re a homeowner facing foreclosure, for two reasons:

(i) Banks Don’t Want Your Home: Banks are in the business of lending money, not buying and selling homes, which is what many find themselves doing in this foreclosure crisis. As discussed in this “stopping foreclosure” post here, it costs them money when homeowners walk away from a home and/or are officially foreclosed upon.

So keep this in mind when you are negotiating with them.

(ii) Government Programs Available to Stop Foreclosure: As discussed in this post on home loan modification, the government is giving incentives for mortgage holders to work with homeowners so they can prevent foreclosure.

If one program doesn’t work, try another one. You may have to do some digging, but there is help available.

It benefits everyone for a homeowner to hang onto his/her home. And that’s why so many prevent foreclosure options are available right now.

Gain Further Insight on Mortgage Loan Modifications from the Attorney in the Video Below. Remember, if you’re facing foreclosure, there is help and you’re not alone.

P.S.: You Can Save Hundreds of Dollars — Or More — Per Month on Your Mortgage: There are homeowners just like you who have saved thousands of dollars in loan modification fees. And, they’ve lowered their mortgage payments by hundreds — and in some cases over a thousand dollars — a month. Get the details in this home loan modification kit.

P.P.S.: Found this post informative? Follow Foreclosure Business News on Twitter.

Copyright © 2009 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.

Foreclosure Laws: Divorce, Debt & Foreclosure – What Every Dependent Spouse Needs to Know

I was watching the Dr. Phil show recently entitled the Biggest Financial Mistakes people make.

The show featured the real housewives of Orange County. One of the housewives on the show was struggling and obviously needed to downsize. She lived in an 8,000+ square foot home and was not making the $1,000,000 plus (yes, that’s seven figures) she was accustomed to making any more.

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Anyway, the financial expert gave some insightful tips at the end of the show that every dependent spouse (mostly women) need to know. Following are three of them that stood out that most people probably don’t even know about when it comes to divorce, foreclosure and debt:

Foreclosure Law: 3 Pieces of Critical Info for Dependent Spouses

Spousal/Child Support: Spousal and child support are calculated based on earnings for the last few years (somewhere in the neighborhood of 3-5, depending on your jurisdiction).

New Year Divorce Surprise: When an already unhappy marriage is compounded by money worries, ie, thinks like, a significant dip in earnings, the threat of foreclosure and mounting consumer debt, it can be the tipping point.

Hence, many men file for divorce around the first of the year. It’s a psychological thing for both men and women probably in that if you’ve been unhappy in a marriage for years, you want to start the New Year off right.

The part that can hurt dependent spouses though is that if a bread-winning partner files and has to pay spousal/child support, they “lock in” the lower rate they’ll have to pay. Remember, spousal and child support are calculated by the courts based on earnings for the last few years.

This means that if a spouse averaged $500,000 a year in good times, he would be required to pay “x”. But if he filed for divorce and his earnings only averaged $275,000 over the last few years, then he’d only be required to pay based on this (NOT $500,000).

This brings us to the last point the financial advisor on the Dr. Phil show made, and that is . . .

Don’t Sign Anything: It’s important for women (ie, the dependent spouse) NOT to sign any agreements like support and alimony documents that can’t be modified when the bread-winning spouse’s income starts to improve.

Case in point: One of the women featured on this episode of the Dr. Phil’s had a husband who was a builder. Now, everyone knows real estate is in the toilet now. Hence, her husband’s income had tanked.

But, when things turn around – and they always do because every economy is cyclical – her husband will ostensibly start to earn more. She could then seek a support modification. BUT, if she signs away those rights, she probably won’t be able to do so.

How a Divorce Can Bring on Foreclosure

Simple: most dependent spouses are women. They are usually given the family home in a divorce settlement, especially if they have children.

What if the support you receive doesn’t cover your mortgage payment? You could face foreclosure, in addition to having to deal with a divorce.

Foreclosure Laws: Home Foreclosure, Divorce & Debt Advice

Bottom line: If you’re a dependent spouse (husband or wife), consult an attorney before you sign anything. It’s already a stressful time. You don’t want to be dealt a surprise foreclosure on top of everything else.

P.S.: You Can Save Hundreds of Dollars — Or More — Per Month on Your Mortgage:  There are homeowners just like you who have saved thousands of dollars in loan modification fees. And, they’ve lowered their mortgage payments by hundreds — and in some cases over a thousand dollars — a month. Get the details in this home loan modification kit.

P.P.S.: Found this post informative? Follow Foreclosure Business News on Twitter.

Facing Divorce and Foreclosure? Get some insight into foreclosure laws and what to expect from a divorce attorney in the video below.

Copyright © 2009 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.

Stopping Foreclosure: Loan Modification Program That Helps Struggling Homeowners

The foreclosure crisis is showing no signs of receding. In fact, it seems to be getting worse. And now, the Obama administration is taking more aggressive steps to nudge mortgage providers into helping struggling homeowners hang on to their homes.

So just what is this latest step aimed at stopping foreclosure for many homeowners? It’s a Treasury program whose goal is, according to the Baltimore Sun article, Administration plans to press mortgage providers to accelerate help to struggling borrowers, to:

. . . increase the rate at which troubled home loans are converted into new loans with lower monthly payments, . . . Industry officials said the new effort would include increased pressure on mortgage companies to accelerate loan modifications . . .

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Stopping Foreclosure: What Government Program Means for You & Your Mortgage

What does this mean for the average homeowner who is desperate to stop foreclosure? A couple of things.

First, it means that the government is finally getting realistic about what’s causing the foreclosure crisis to deepen. At first, it was subprime mortgages. The prolonging of this crisis can be placed squarely on people losing their jobs.

No job; no money to pay the mortgage. Simple economics.

Second – and perhaps more important – it means that more help is going to be available to homeowners who are trying to stop foreclosure. Via this program (the Home Affordable Modification Program), the government is putting its money where its mouth is. How? By giving cash incentives to mortgage providers.

Under the Home Affordable Modification Program, those lenders that work with homeowners to lower payments will be paid $1,000 for each loan modified. AND, they can receive an additional $3,000 (spread out over three years, ie, $1,000 per year).

Why Your Mortgage Provider WANTS to Help You Stop Foreclosure

As mentioned in the last post here on stopping foreclosure, it costs lenders roughly $78,000 to foreclose on a home. And what does it cost them NOT to foreclose? About $3,300. So many mortgage companies are willing to play ball because it’s way cheaper for them – and better for you. A win win for all.

Stopping Foreclosure: Are You Eligible for Help under the Home Affordable Modification Program?

If you’re serious about stopping foreclosure and want to know if you qualify for a home loan modification under this program, visit http://makinghomeaffordable.gov/modification_eligibility.html.

P.S.: You Can Save Hundreds of Dollars — Or More — Per Month on Your Mortgage:  There are homeowners just like you who have saved thousands of dollars in loan modification fees. And, they’ve lowered their mortgage payments by hundreds — and in some cases over a thousand dollars — a month. Get the details in this home loan modification kit.

P.P.S.: Found this post informative? Follow Foreclosure Business News on Twitter.

Beware of Foreclosure Scams: Learn more in the video below.

Copyright © 2009 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.

Top Home Foreclosure News for 11/30/09

From the Boston Globe Online (Boston.com): More fiddling as foreclosure crisis rages on

Highlights:

14% of homeowners in trouble – either in foreclosure or late on mortgage payments. SourceMortgage Bankers Association

The foreclosure crisis is ongoing; foreclosures will continue to rise in 2010 Obama administration efforts to stop foreclosure not working.

Read the full article on home foreclosures.
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From the Miami Herald Online (MiamiHerald.com): Treasury pressures mortgage servicers to help homeowners

Highlights:

Mortgage “SWAT” Teams: The Obama administration is sending in financial overseers to the 6 largest mortgage servicers to see how they service loans, ensuring that the $75 billion the government has allocated to a mortgage modification program doesn’t go to waste.

Rising unemployment is seen as the problem behind a lot of foreclosures and late mortgage payments now.

Over the next few years, as many as 3 million foreclosures are expected to flood the market.

Read more about this coverage of the continuing home foreclosure crisis and the mortgage loan modification help the government is offering.
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From BusinessWeek.com:  Home Lenders Face Sanctions Over Failed Modifications

Highlights:

The Obama Administration is threatening to level consequences against those mortgage providers who aren’t “playing ball,” ie working to help struggling homeowners modify their existing mortgages under its Home Affordable Modification Program. Exactly what consequences? Sanctions and fines are in the mix.

The treasury is urging mortgage providers to speed up the process of mortgage loan modification.

Roughly 650,000 loans have been modified under the program, far below the goal at the inception of the Home Affordable Modification Program  — which was 4 million.

Learn more about this coverage of the Home Affordable Modification Program and see if you qualify for a mortgage loan modification under this program.

Copyright © 2009 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.

Mortgage Loan Modification: Top 10 Questions About (Home) Loan Modifications

The loan modification process can be frustrating and confusing for many distressed homeowners. If you are considering contacting your lender about a loan workout to avoid foreclosure, you need to get as much information upfront as possible so you will be prepared and able to present your case in the best possible light.

Programs and guidelines are changing and it is getting much easier for homeowners to get the help they need. To help you understand how the process works and what you can expect, here are the Top 10 Questions and Answers.

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Home Loan Modification: Frequently Asked Questions/Answers

1. What exactly is a loan modification? A loan modification is a permanent change in one or more terms of a borrower’s home loan, allows the loan to be reinstated, and results in a payment the homeowner can afford.

2. Can the lender include late charges in the Loan Modification? The federal plan mandates that the bank waive any administrative charges, late fees and penalties when offering a loan workout.

3. How will the new government programs help me get a loan modification? The Federal government has allocated $75 billion dollars to subsidize lenders and servicers who offer a loan workout to their clients.

Now, the banks will have a monetary incentive to offer help to qualified borrowers. In addition, homeowners who pay their new modified payments on time will be eligible up to $5000 credit to their loan balance.

4. How do I know if I will qualify for a loan modification? The number 1 criteria your lender is looking at is your ability to make the new modified payment now and in the future.

You need to supply the lender with proof of your income, along with a complete and accurate financial statement detailing your income and expenses to show them that if granted the modification, you will be able to afford the new, lower payment. You must also be able to demonstrate that you are facing a financial hardship-lower income or higher expenses for example.

5. Do I have to be currently delinquent on my payments to get a loan modification? President Obama has included a special incentive under the Home Affordable Modification Plan that will pay lenders an extra bonus for reaching out to homeowners not yet delinquent but at risk in the future. The goal is to help borrowers before they fall into default.

6. What is an acceptable Hardship situation? Each homeowner has a unique set of circumstances that caused them to fall behind on their home loan, but generally the lenders consider divorce/separation, loss of income, death of spouse, co borrower or family member, illness, job relocation, military service to be acceptable reasons to consider a loan modification.

A compelling hardship letter included in your application is a very important part of a successful application.

7. Will a loan modification help me stop foreclosure? Yes, that is the goal-by working with your lender to find a loan workout solution, your loan is brought current and the foreclosure process is halted.

8. Can my missed payments be added back into my new loan modification? Yes, the arrears can be added to the new loan balance and spread out over the term to allow the loan to be brought current.

9. Can I do a loan modification myself or should I pay someone to represent me? That is entirely up to you and your comfort level with dealing with your lender.

The Treasury Department is strongly discouraging the payment of any fee to a third party to represent you in a loan workout. Regardless of what you decide, the first thing you should do is learn all you can about the process, your legal rights, and what it takes to get your application approved. An informed homeowner is harder to take advantage of and will have a much greater chance of success.

10. So how do I get started to modify my loan? Before contacting your bank’s loss mitigation department or a loan mod company, do your homework-learn as much as you can about the loan modification process so you can make informed decisions.

President Obama’s Home Affordable Modification Plan offers real hope for millions of homeowners who need a solution to stay in their home. Not everyone will qualify however, and interested borrowers will have to complete loan modification application forms, provide proof of their income and meet certain eligibility requirements.

Most lenders are participating in this new government subsidized plan, and homeowners are encouraged to learn how they can qualify and apply for a loan workout and avoid foreclosure.

You can get the help you need to apply and qualify for a loan modification by ordering and downloading the best selling handbook for homeowners, The Complete Loan Modification Guide.

This is a low cost, easy to read home edition loan mod kit that will provide you with everything you need to prepare a professional and acceptable loan modification application. You are provided with all of the necessary forms and given detailed directions on how to complete them properly. The Complete Loan Modification Guide will take you step by step through calculating your debt ratio, completing the financial statements, writing your hardship letter and then putting it all together to submit to your lender.

Learn how to apply and qualify for the Obama federal program too. Get started today on the path to secure home ownership, order and download The Complete Loan Modification Guide.

About the Author: For more information about mortgage loan modification, please visit us at: http://www.myloanmodificationcenter.com. Article Source: http://EzineArticles.com/?expert=Susan_V._Gregory

P.S.: You Can Save Hundreds of Dollars — Or More — Per Month on Your Mortgage:  There are homeowners just like you who have saved thousands of dollars in loan modification fees. And, they’ve lowered their mortgage payments by hundreds — and in some cases over a thousand dollars — a month. Get the details in this home loan modification kit.

P.P.S.: Found this post informative? Follow Foreclosure Business News on Twitter.

Stop Foreclosure: The Secret Your Lender Won’t Tell You That Can Help Save Your Home

A Message from the Editor

If you’re facing foreclosure this holiday season, we sympathize and hope that you’ll find your way through this difficult time. In spite of it all, enjoy the holiday. And, hold on to friends and family for they are the most important “asset” you will ever have. 

Happy Thanksgiving from Foreclosure Business News!

 

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Now, on to today’s post.

What Is the Secret that Could Stop Foreclosure?

There’s an eye-opening secret many homeowners should know about that can alleviate the worry of foreclosure, and get them on the road to saving their home. Your lender won’t tell you about it because they realize that if you know, you operate from a position of power, not fear.

Stop Foreclosure: The Main Reason Homeowners Can Keep Their Homes

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It’s simple – the bank doesn’t want your home. In fact, they want you to stay in it. Even if you’re behind, they STILL don’t want your home. “Huh,” you may be thinking, “if they don’t want my home, then why are they threatening to take it away from me?”

Stop Foreclosure: The “Games” Lenders Play

In order to understand why banks don’t want your home, it helps to understand the games – for lack of a better word – they play.

It’s in the bank’s favor for you to believe that they want your home. They know that you will beg, borrow, steal and scrimp to do everything in your power to hang onto your home – even when it’s beyond your financial capacity to do so.

This is why many won’t work with you to stop foreclosure – at least initially. They figure that if they threaten you with foreclosure, you’ll somehow pay.

Then, when it becomes evident that you really can’t continue to make your mortgage payment and you start falling behind, they start to cave and offer solutions like home loan modifications, home loan reductions and home loan refinancing.

Stop Foreclosure: Why Being Late on Your Mortgage Payment Can Actually Work in Your Favor

You know, just like credit card debt for example, falling behind on your mortgage can actually work in your favor. While it doesn’t make any common sense – really, who WANTS to fall behind on their mortgage payment – it’s actually when lenders start to take seriously that you can’t pay.

Instead of you being afraid, then THEY become afraid that you’re going to simply walk away, which is what many homeowners have done since this foreclosure crisis start in the fall of 2007. When a homeowner walks away, the lender is left holding the financial bag.

Foreclosure Costs: $78,000 to Foreclosure on a House & Only $3,300 NOT To

According to the post, Foreclosure costs explained: $75,000 per house, on BloggingStocks.com, the overall costs associated with foreclosing on a home is $78,000. And the cost to stop foreclosure? A mere $3,300. The post states:

A report by the Joint Economic Committee of Congress estimates that the average cost of a foreclosure, to the homeowner, lender, local government, and neighbors (whose homes decline in value), is $78,000. By contrast, preventing the foreclosure would cost $3,300 per home on average.

And this is the real reason banks don’t want your home. They’re in the business of lending money . . . not buying and selling homes. You see, when a bank forecloses, they then have to pay property taxes, HOA dues, fees to maintain the property, fees to secure the property from vandalism, vagrants, etc.

And, they have to do this for months . . . or perhaps even a year or two until the property is resold. This can cost them a fortune.

So, even though you may fall a few months behind, it’s in your lender’s favor to work with you. Many of them are finally realizing this. This is why the first step in stopping foreclosure is to call your lender.

Remember, you’re not as bad off as you think. You DO have the power to stop foreclosure in most cases. Get more specific info (actually 7 really good detailed tips) on how to stop foreclosure in the video below.

Qualify for a Home Loan, Even with Bad Credit

Has a past bankruptcy, foreclosure, or other bad credit challenge stopped you from applying for a home loan? Need to know how to qualify for a mortgage in spite of these credit challenges? Now you can get the mortgage qualification info you need.

P.S.: Business Opportunity: Learn how to secure your financial future (want to retire early) by buying foreclosures cheap.

P.P.S.: Found this post informative? Follow Foreclosure Business News on Twitter.

Copyright © 2009 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.

Foreclosure Clean Up Insurance: All the Info You Need to Know About This

Cassandra Black, Founder and CEO of Foreclosure Cleanup, LLC in Atlanta says:

Questions about insurance are one of the most often-asked that we receive as a certified foreclosure cleanup company. I understand why, because it can be confusing. Even some insurance agents don’t know how to advise you on what type and how much to get.

In response to this, Ms. Black recently published a Foreclosure Cleanup Insurance Ebooklet. It addresses all the insurance questions anyone who’s interested in starting a foreclosure cleaning business would have.

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Ms. Black says this info on foreclosure cleaning insurance is covered in her best-selling ebook, How to Start a Foreclosure Cleanup Business. But, she says, “To give those who just need foreclosure cleanup business insurance information, we offer this ebooklet  separate and apart from the ebook. This way, those who don’t need the full contents of it don’t have to pay for it.

The #1 Reason Foreclosure Cleaning Businesses Need Insurance

When starting your foreclosure cleanup business, there are a lot of things you can skimp on. Insurance is NOT one of them. You need to be properly licensed and insured to be get business because banks, lenders, real estate agents, etc., simply won’t deal with you unless you have it. It’s one of the first things they ask for.

You also need it to protect you, your workers and your property as you grow your business.

This in-depth e-pamphlet gives you the info you need to get insured right — right from the start. 

P.S.: Business Opportunity: Learn how to secure your financial future (want to retire early) by buying foreclosures cheap.

P.P.S.: Found this post informative? Follow Foreclosure Business News on Twitter.

Copyright © 2009 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.

Foreclosures for Sale: The Difference Between an REO and a Regular Foreclosure

The foreclosure crisis has caused many foreclosed homes to flood the market. What this means is a great opportunity for real estate investors looking to buy foreclosed homes (REO properties) cheap. Many of these are new investors who don’t understand the different types of properties available for sale.

Hence, a common question is, “What’s the difference between a regular foreclosure and an REO foreclosure?” Following is the answer.

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Home Foreclosure: What Does REO Mean?

It means real estate-owned. It’s a nice way of saying the bank owns the property; they’ve “repossessed it so to speak”. So when you see a listing for an REO property, it has already been foreclosed on and has gone back to the bank.

A “regular” foreclosure, on the other hand, is a process whereby a property is in the process of being sold. It can be bought at auction (those selloffs on the county steps) by an interested party, ie, an investor or a new homeowner.

A Pro and Con of Buying REOs

Pro: They can be bought cheap. The rationale behind this is simple – banks are a business and they lose money when they have foreclosed properties on the books. Banks/lenders lose on two fronts with REOs: (i) money going out; and (ii) no money coming in.

Money Going Out: There are carrying costs with foreclosed properties that the banks have to pay. After all homeowners insurance still has to get paid; HOA dues still have to get paid; and maintenance has to take place.

No Money Coming In: Nobody’s paying the mortgage, so the bank is not making any money.

Con: Oftentimes, banks don’t do repairs on REO listings. You’re often buying them “as is”. Remember, banks are a for-profit business. They’ve paid the carrying costs for the property since the previous owner stopped paying the mortgage.

As you usually cannot get disclosures as to the history or condition of the property, you could be buying a cash-sucking cow when you invest in REOs. There could be all kinds of problems – expensive ones like wiring, roofing, contractor liens, etc.

If you’re thinking, “I’ll get an inspection done beforehand, “ think again. You might not have the chance, depending on when the property goes up for auction and how the auction is carried out in your municipality.

In spite of all of this, purchasing an REO property is a great way to buy foreclosures cheap.

P.S.: Business Opportunity: Learn How to Start a Foreclosure Cleanup Business. Read how one foreclosure cleaning biz owner makes up to $40,000/wk .

P.P.S.: Found this post informative? Follow Foreclosure Business News on Twitter.

Learn more about buying real-estate owned properties (REOs) in the video below.
Copyright © 2009 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.

Home Foreclosure: The New Credit Standards to Qualify for a Mortgage Brought on by the Crisis

Because of the foreclosure crisis we’re going through, new credit standards for purchasing homes have been put into place. Depending on which side of the fence you’re on, it’s either a good thing, or a hindrance to buying a home.

Here we’re going to look at the FICO score. Following is a look back at what FICO scores used to have to be to qualify, and what they need to be now.

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First-Time Home Buyer Mortgage Qualifications: A Look Back at Old FICO Standards

On a recent news cast, the announcer blared from the screen that some credit card issuers were looking at making 740 the FICO score you needed to qualify for a credit card. It used to be that if you took a breath, you could get a credit card. Even pets could get credit cards (this is how free willing credit card companies were when extending credit).

So, what does this have to do with getting a mortgage? Well, who extends credit for credit cards? Banks.

And, who extends credit (loans) for mortgages? Banks.

Zero Down Home Loans: Get 100% Financing with a 580 or 620 FICO Score?

FICO scores have to be a lot higher than they used to be to qualify for a home loan. When I was a mortgage consultant, a prospective homeowner could qualify for 100% financing and a conventional mortgage with a 620 FICO score in most cases.

In a lot of cases, a prospective homeowner could qualify for 100% with a 580 FICO score — it would be subprime, but they wouldn’t have had to come to the table with any money nonetheless.

The New Reality: What Your FICO Score Need to Be to Buy a Home Nowadays

Now, banks have raised the bar on what your FICO score has to be to get the best interest rate . . . and it ain’t what you’ll read when you go online. Most sites still have it at 620 to 640. It’s not.

Many mortgage lenders now – whether they’re on the record or not – want you to have scores of 750- 780 to qualify for the best interest rates on conventional mortgages.

Refinancing a Mortgage: 720 Not Good Enough

As the editor of this site, I get a lot of insight from readers and from friends and acquaintances alike.

One friend of mine went to refinance his mortgage. He’d recently come back from being deployed, had paid off some bills and thought it would be easy for him to refinance. After all, his credit score was a 720, he’d been on his job for 13 years and had been in his home for more than five years.

But, even with all of this, he was unable to refinance.

I think a lot of banks are scared of where the market is right now – and how long it’s going to take it to recover.

Home Loan: How Much of a Down Payment Do I Need to Qualify for a Mortgage?

More Mortgage Questions Answered: In a future post here, we’ll look at what banks expect in the way of down payment nowadays.

Got Bad Credit: Learn How to Repair Your Credit So You Can be “Mortgage Ready”

Before you can fix your credit, the first thing you need to do is understand what it is and how lenders use it. Repairing your credit is like being part of some special club. You have to gain access to the rules of the “credit repair game” in order to be able to “compete” and clean up bad credit.

Learn the credit repair rules that banks play by so you can qualify for a home loan to purchase the home of your dreams.

First-time Home Buyer Loans: Need Down Payment Assistance to Qualify for a Mortgage? Get details on this in the video below.


P.S.: Business Opportunity:
Learn How to Start a Foreclosure Cleanup Business. Read how one foreclosure cleaning biz owner makes up to $40,000/wk.

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Copyright © 2009 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.

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