3 Ways to Buy a Home AFTER Foreclosure |
Know all your options, find good, qualified people to help and you’ll do just fine. Watch out for Fraud. A lot of sharks prey on homeowners in foreclosure. If something sounds too good to be true it usually is. Remember that fraud depends on trust. The folks that are the best at it always appear to be someone you can trust. They are really, really nice folks. You will really, really like them. They have to be so nice to gain your confidence. Be wary. Sharks can smell your desperation. They know what words you need to hear. Use common sense and don’t be afraid to talk to a lawyer, your realtor, your lender, or others about any offers you receive. In Arizona a lawyer has been indicted for falsely claiming to help owners in foreclosure and embezzling their funds. Yikes!
Now, you will not be able to obtain an FHA mortgage for two years and a conventional loan will take even longer (four years). Meanwhile, a reputable Realtor can find you a rental property where the owner may consider a lease option, lease purchase or carryback.
A lease option allows you to rent the property for a year or more and be first in line to purchase it at the end of the contract. Ask your Realtor to negotiate a two year lease option contract.
In a lease purchase , you simultaneously sign a rental agreement and a purchase contract. Your Realtor will help you to negotiate a percentage of your rent to be paid towards the purchase. In today’s market with declining property values a lease purchase is a great deal for the seller and a sorry deal for the buyer. The seller is selling the house at today’s price but will get only partial payment until the end of the lease contract. Even if the house falls in value, the buyer is bound to purchase the home. No one can accurately predict what home values will be in any given neighborhood in one or two years from now. Not with the financial crises our markets are in. A buyer may be stuck with a purchase price on their contract for a house that has lost value. Not good for the buyer.
A seller carryback can take place only when a seller owns their home outright. They do not hold any mortgages on the property. The seller can then act as the bank. This means the buyer pays a down payment to the seller and then pays monthly ‘mortgage’ payments to the seller.
For any of these three choices, use a Realtor to handle your negotiations, draw up your contracts and oversee that the transaction works in your best interest and is legal. What you do not want is to be too hasty and get into a deal that is messier than your foreclosure. Chandler and the Phoenix valley have had an explosion of foreclosed homes in recent months. The amount of foreclosures is predicted to double in the coming months.