Home Mortgage Foreclosure

If you are considering buying a home through pre foreclosure leads obtained through a listing service or a real estate provider, it is important to develop an approach to speaking with the homeowner that is both positive and supportive. It is absolutely critical to keep in mind that this is a deeply stressful time for a homeowner that is likely facing foreclosure and developing a dialogue or introduction to your interest in purchasing the property has to be done with diplomacy as well as honesty.

Many homeowners, especially those that feel they have been mislead by lenders in the past, are often very hostile and highly defensive and mistrustful of anyone approaching them with “this is the answer to your financial problem” type sales pitches. When you obtain pre foreclosure leads, keep in mind that some people will be able to get refinancing, some will work with their lenders and not all are in dire financial situations. Approaching the homeowners from an interested and supportive stance is much more effective as they are less likely to group you in the category of untrustworthy or as being an opportunist to their misfortune.

Pre foreclosure leads can be contacted by several different methods. The cheapest and least intrusive to the homeowner is to send them a registered letter, letting the owner know that you are interested in purchasing their home. Using mass mail outs can also be effective, however this can be viewed by the owner as another ploy by huge companies that only offer discount prices for the home and property. By following up on only the pre foreclosure leads you are really interested in using a personalized, registered letter you may get more responses from homeowners.

Once the pre foreclosure leads have led to a response from the buyer, the next step is to set and appointment and meet with the buyer, typically at the property. If the buyer is seriously considering a short sale on the property, he or she will be willing to allow you to look through the property at this point. You should then obtain the information needed to speak directly to the lender, should you consider making an offer. Keep in mind that the owner may be unaware of current market values, so having some comparable sales information for foreclosed homes in the same area is very important. For owners this can be tough to understand if they value their homes at the original price, so you may want to provide this information to the owner before the meeting by mail to allow them to review this material privately and gain an understanding of the market.

No homeowner plans to go into pre foreclosure through default on their home loan repayments. Unfortunately many homeowners find themselves in this very situation each and every day. With worsening conditions in the economy more and more homeowners, especially those with the so called “jumbo loans” or those with variable rate ARM (adjustable rate mortgage) loans are particularly at risk for going into pre foreclosure. The good news is that there is a pre foreclosure solution that can work for many homeowners, but it does require being proactive and acknowledging the problem as soon as possible.

The first step for a homeowner to come to a pre foreclosure solution that will work for both themselves and the lender is to eliminate all other debt as quickly as possible. This may mean taking out a long-term fixed rate consolidation loan on all credit cards or car notes and other debts before falling behind on the house payment. Most homeowners simply ignore the warning signs of mounting debt, seeming to hope they can somehow borrow their way out. This never works, and even a consolidation loan will only work if you are also eliminating all expenses and luxuries out of your life and living as much as possible without using credit. This means getting rid of those extras such as cell phone plans that are above the basic, eliminating luxuries such a broadband internet, satellite television or expensive plans on your home phone. Most families can save hundreds of dollars per month just by cutting out those four expenses in the house. Using this pre foreclosure solution of living well within your means helps your lender understand that you are serious and proactively working to get back on your financial path.

The second step in a mutually agreeable pre foreclosure solution is to prove to the lender that you have the income you need to make the payments if they either modify your mortgage or refinance. This means someone in the household may need to take on an additional part time job to add to the total monthly income. Most lenders are not going to be able to work with a homeowner that has no increase in income and decrease in spending since there is no mathematical way to justify a loan or a mortgage modification.

The third step is to prepare a hardship letter for your lender, which will outline the problems in your financial history and how you have resolved these issues. A big consideration that many lenders look for is a pre foreclosure solution that includes using a reputable credit counseling service to assist families in getting back on track financially.

With the dramatic changes in the investment real estate market there is a huge potential for individuals that are able to make sound investments to really capitalize their investment potential. Taking a pre foreclosure course, either in person or through an online site, is a great option to learn about the various factors that are important when getting into this investment option. Since investors are literally making thousands of dollars on a good investment property, a pre foreclosure course is really a very small expense that will quickly pay for itself.

When selecting a pre foreclosure course there are a few key factors to keep in mind. The first and likely the most important is the experience, training and qualifications of the course providers. Unfortunately there are a great number of courses offered online and even in person that are taught by someone that has limited or no actual experience in the investment field, rather they are simply selling a product, which in this case is the course materials. Look for programs that have proven investors that are selling more than just their tapes, books or software programs through the program. A good pre foreclosure course does not promise to make you a millionaire in six months or a year, rather it provides a strong fundamental knowledge of the risks and benefits to investing in homes and properties.

The next step is to consider if you would do best with an in person type class or an online pre foreclosure course. If you like a lot of interaction, learn best from hearing others talk or discussing topics, an in person class may be the better option. With in person classes you will have to select a pre foreclosure course that is held at times that are convenient to you, whereas the online option provides more flexibility. An online pre foreclosure course is a great option for a busy working professional or those with family commitments that make attending an in person course difficult or impossible. Online courses do require personal dedication and self-motivation to complete the course materials, but the information is available 24/7 for browsing and reviewing. If you are signing up for an online course make sure there is some type of phone number or email site where you can directly contact the instructor for help or questions.

Finally, make sure that the course you have selected is going to provide you with the in depth understanding of the foreclosure process including your own particular state regulations. If the course is more general in nature or if you are considering investing in many different states, ensure that the course provides access to resources where you can research mortgages, lending and foreclosure laws for the various areas you are interested in.

Finding free pre foreclosure listings is relatively simple if you have access to the computer. Since these free pre foreclosure listings are open to everyone to view, you don’t have to worry about only premium members having access to certain types of listings, everyone using the site has the same information and opportunities to find homes that are potentially moving towards foreclosure.

Free pre foreclosure listings can be located through several different search terms and using a variety of search terms can really help you find all the possible sites. Since some of the free pre foreclosure listings will be only within a specific county, metropolitan area or state, be sure you include the location name in the search unless you are browsing around for possible investment properties where you may not be as concerned about their location.

Search criteria to use can include terms such as:

? Free pre foreclosure properties
? Free pre foreclosure homes
? Pre foreclosure properties in (state or city)
? How to find free pre foreclosure listings
? Pre foreclosure listings and free
? Homes in pre foreclosure

When using free pre foreclosure listings be aware that these sites get a lot of traffic and highly desirable homes or areas will be targeted quickly. Some sites allow you to use the free side of the site for browsing, however if you join the site as a member or subscribe to the site you can enter a property description and the site will email you or send a text message when houses or properties meeting your description come on the list. Some websites will allow you to view the site for free, however you will have to provide a valid email address and contact information, which typically means that you will be bombarded with emails from agents as well as advertisements from the site sponsors.

The pre foreclosure sites are generally very easy to use, with interactive maps that allow you to click on the state, county or city that you are interested in, which then brings up a list of pre foreclosure properties. Not all of the sites will have the same properties, so if you are seriously looking for a specific property be sure to check several different free sites, don’t just rely on one.

If you have the time to browse through the site on a regular basis using the free pre foreclosure listings can save you the money of the site membership, which can be fairly expensive if you enroll at the premium level. In addition your real estate agent may also be able to provide free pre foreclosure listings and he or she will review and eliminate the properties that are not a match for your requirements.

Many individuals don’t realize that there are many steps involved in a foreclosure procedure, some which are designed to allow the homeowner to correct the defaulted payments and retain their home. Pre foreclosure is one such step. This preliminary step to a full foreclosure is a set period of time, usually between three and six months, where the home or property missed payments can be made up, preventing the property from going into full foreclosure. The bank or lender must notify the homeowner in the pre foreclosure stage and will typically work with the owner to try to come to some type of payment plan that will satisfy the lender and still be manageable for the owner.

While it may seem that lenders are unwilling to work with homeowners that have defaulted on payments, in reality starting a foreclosure process costs the lender money, plus they rarely get their full investment or loan amount back. In difficult economic times they may end up not being able to sell the house for a reasonable market value, so may take an additional loss on that end as well as on the foreclosure. During the pre foreclosure period the bank or lender is often highly motivated to work with the homeowner, even if it means refinancing options or spreading the payments out over a much longer period of time. Typically working with the lender earlier in the pre foreclosure period is better rather than waiting until the end of the grace period.

The exact length of time for a pre foreclosure period is determined by state regulations, so checking with your real estate agent, real estate attorney or lending institution can help you know exactly how long you have to negotiate a settlement before the full foreclosure can be started. During the pre foreclosure period the lender cannot start foreclosure action, so it is critical to know exactly how much time you have.

During the pre foreclosure time frame the lender basically does not have a legal standing or legal right to attempt to force the owner out or off of the property. Once the pre foreclosure period is over and the lender and the homeowner have not been able to reach a settlement option to pay the deficit amount on the mortgage, the lender is within their rights to proceed with foreclosing and taking over the property. If the homeowner and the lender are able to work out a repayment agreement, the foreclosure is stopped and the agreed upon repayment plan, refinancing or extension of the mortgage is put into place. A property can go through this process more than once, however typically lenders become less willing to work with the homeowner when this type of default becomes a pattern or happens more than once.

A pre foreclosure sale is most commonly referred to as a “short sale” since the seller is going to have to sell their house or property “short” of the actual market value. Since the seller already knows that they will be getting less out of the house than they put in, maximizing their return on the pre foreclosure sale is key as this decreased the amount they will need to borrow or continue to pay on the balance of the mortgage. In cases where the owner is not able to sell the home prior to the foreclosure, they will lose the house and property and will take a significant hit to their credit score as well as there ability to obtain a home loan, or any other type of loan, well into the future.

Since a foreclosure is so negative, most homeowners that cannot refinance or work with their lender to catch up on defaulted payments and set up an appropriate program of repayment for the future often choose the option of a pre foreclosure sale. As an investor it is critical to consider all option of the pre foreclosure sale as there can be hidden costs, fees and significant upgrades required to the property before it can be resold. Even if a house is purchased for thousands of dollars below market value if it needs thousands of dollars of upgrades it is not a bargain.

Unfortunately many first time investors get caught up in the hype and marketing that many pre foreclosure sale companies and marketing agencies promote. Buying a house in a depressed housing market, even at a bargain price, doesn’t make sense if you can’t rent it out or sell it for more than you bought it for. In cases where there is a depressed real estate market, buying only makes sense if you have the ability to pay the mortgage yourself or if you intend to live in the house and make the payment. Buying a house assuming that the pre foreclosure sale low price will mean that you can somehow sell it for more in the same market is not realistic, although many agents and marketing companies will not present this information.

If you are considering a pre foreclosure sale property, first start by seriously looking at your financial status. If you can afford to purchase the house without putting yourself at risk, then answer the following questions:

? Could you afford the mortgage payment if the property did not rent or sell?
? How much money would be needed to complete the upgrades to make the house more attractive on the market?
? Does the location warrant the upgrades in your return? Older neighborhoods or neighborhoods in transaction are often poor investments.
? What are the overal comparable sales figures for similar houses in the area?

Knowing the pros and cons of purchasing a pre foreclosure sale property are important for your financial future.

It is always devastating to families and individuals when they are in default of their mortgage payments and face the possibility of being forced out of their homes. Thankfully there are several refinance pre foreclosure options that are available for homeowners, depending on their financial standing, credit history and record and the circumstances that led to the home or property mortgage not being paid. Refinance pre foreclosure methods will also differ slightly from state to state, so always do some research and learn about what your state offers and requires. This will help you discuss refinance pre foreclosure options with your lender from a knowledgeable and informed perspective.

The first step in obtaining information on how to refinance pre foreclosure property if you are home owner is to talk to someone that is knowledgeable about both your options and your legal rights. A HUD housing counseling agency can be a good first step, as these counselors can provide information on various government programs that may be available in your area. To access these services check your local government website or contact your Veterans Affairs department if you are current or past military and purchased your home with a Veteran’s Administration (VA) guaranteed loan.

Refinance pre foreclosure options may also include an actual modification in your mortgage payment, without the requirement of a full refinance. This can be arranged between the lender and the borrower and typically occurs due to some specific issue such as a loss of income, disability or a change in your income that will not allow you to pay the amount you were previously able to cover. Clear information to the lender as well as a prior good payment history before the pre foreclosure is usually critical in this special situation.

A partial claim refinance pre foreclosure deal can be a true lifesaver for both the borrower and the lender. In this option there are several criteria that may be met, but what actually happens in the lender is able to claim the deficit amount through a no-interest loan directly from HUD (United States Department of Housing and Urban Development). This can only happen if the house or property in not currently in foreclosure but is in default between four and twelve months and the homeowner is able to now make full mortgage payments to the lender at the terms of the original loan.

Typically home owners in looking for refinance pre foreclosure options may also be able to work through banks or lenders if they have a significant amount of equity built up in the home. In cases where the homes have no equity or negative equity, options will be very limited. Negative equity occurs when there is more owed on the home than the property would bring in if placed on the market.

There are hundreds if not thousands of free pre foreclosure lists, so why bother to pay for pre foreclosure lists that provide the same information? Believe it or not it may actually save you money to pay to belong to a website that allows you to view pre foreclosure lists, rather than to use the free sites. The following reasons are the key factors in why paid pre foreclosure lists are ideally suited to serious investors.

Time IS Money

In the investment and real estate world this is absolutely true. The time that it takes to browse through the hundreds of thousands of pre foreclosure lists on the internet is time that you could be spending contacting home owners, surveying areas and neighborhoods and putting together offers and information. The more serious of an investor you are the more critical time is when you are juggling multiple deals at the same time. Using free pre foreclosure lists may be cost saving money wise, but if you factor in your hourly rate you will definitely be losing money each minute you spend at your computer looking through lists that might not have one property of interest to you.

Research and Tracking

While most of the free lists will provide information on the physical address of the property, many don’t include pictures, specific information on the property, comparable sales figures and even the homeowner and lender contact information. If you don’t have this information, you will again need to take your own time or more likely hire someone else to do this research for you.

The Early Bird Gets The Worm

When pre foreclosure properties are put on lists, there is a huge interest in the property generated by those using the lists. The faster that you can contact the homeowner and the lender the faster you can present the bid on the property for the sale. If you can directly access all the information that you need on the paid site, you are far ahead of the group of investors that is trying to save a few dollars by doing the research on their own.

Finding Just What You Want

The paid pre foreclosure lists all offer the option of notifying you when a property matching your search criteria is placed on the list. This can help you in saving both time and energy as you can really fine tune the search criteria based on price, age of the home, market value, location and other specific criteria.

Avoid Junk Mail

Free sites are paid for by advertisers; so you will have to provide some type of email address to access the site. Once you do that you are giving permission for advertisers to contact you in exchange for the use of the free listings. Paid sites don’t have this same need for income from advertisers, so you will typically avoid all the junk mail associated with using the free sites.

Investors and buyers that are experienced in buying houses and properties on short sales all have a wide variety of pre foreclosure telephone tips that they use to get the homeowner’s attention and get them interesting in working with the investor. If you don’t use the pre foreclosure telephone tips you may still find a homeowner that wants to sell to you, but using these tips will greatly increase your chances.

The key to keep in mind when using the pre foreclosure telephone tips provided below is to be genuine and considerate of the difficult situation that the homeowner is currently in. Tone of voice and ability to relate to the owner is almost as important as the words that you use, and this is one of the most critical of the pre foreclosure telephone tips provided by successful investors.

Other equally important pre foreclosure telephone tips include:

? Avoid calling homeowners at specific times such as during meals, immediately after work when people are trying to relax, early in the morning when families are all busy getting off to school and work or late in the evenings. Consider the best time to be between 7-9 pm or in the afternoons on the weekends or holidays.

? If you get an answering machine leave a message, don’t just hang up. Most people will have caller ID and will assume you are either a salesperson or some type of debt call, so just plan to leave a simple message that includes who you are, what you want to talk about and how the owner can contact you.

? If you are calling the bank or lender be sure to have a detailed plan of how you wish to handle the short sale and what you are prepared to offer. Be sure you know what points you want to go over with the bank official, pre foreclosure or mortgage officer and be prepared to ask for a face to face meeting to work out the details.

? Be open and honest with the homeowner. If you are an investor, detail your experience in helping out homeowners in buying their homes while in foreclosure. If the homeowner knows you have experience, they will likely be more comfortable with the process.

? Always leave the homeowner with contact information. This helps the homeowner feel comfortable that they are working with a real person, not some heartless and distance investment company.

? You may not want to start out the discussion with the price you want to pay for the home. Finding out about the owner’s anticipated or desired price, getting an opportunity to see the interior of the house and find out the particulars of the owner’s financial position are all important before providing a number.

Following a few simple pre foreclosure telephone tips from investors can make your cold call list much less challenging plus you will find out you are able to communicate and connect better with homeowners.

There are a lot of pre foreclosure houses available on the market, many that have excellent investment potential. However, like with any investment, there are some risks associated with purchasing pre foreclosure houses. By knowing what to look out for and what to avoid, investors can reduce the risk of having what looks like a great investment turn into a liability.

The key concepts to keep in mind when buying pre foreclosure houses and properties include:

? Location ? no matter how good of a deal you may get on pre foreclosure houses or properties, if they are in remote areas or in neighborhoods that are traditionally hard to sell, they are not really a bargain. If you can afford to hold on to the property for a longer period of time and have reason to expect the area will transition into a desirable neighborhood due to new expansions, subdivisions, shopping centers or other attractions location is not as critical. In some cases the pre foreclosure properties are located in other high pre foreclosure areas, which means the area will be saturated with investors trying to sell homes they have purchased. This will make resale options less and will also decrease the profit you will make on the property.

? Condition ? some pre foreclosure houses will be maintained in excellent condition, but generally expect some type of repairs. Since the homeowners have been financially strapped, they are less likely to have painted, upgraded or added to the value of the property, especially if they knew they were heading for a foreclosure. In some cases the owners may have actually contributed to the poor condition of the house, although this is relatively rare.

? Back taxes ? in some cases pre foreclosed houses and properties will also have large amounts of back taxes that need to be cleared up in conjunction with the transfer of the title. This can add thousands of dollars to the cost of the property, so make sure you are aware of any taxes owing or other liens against the property.

? Upgrades ? if you are considering pre foreclosure properties that are older homes, they will need to be upgraded before they can be put on the market as rentals or properties for sale. Often rental properties are only upgraded with new paint and carpet, but a house for sale may need the fixtures changed, flooring upgraded, windows and roof replaced and even the kitchen or bathrooms remodeled. If you can do some or all of the work yourself this can save costs, however it will still take time and money.

If you are new to buying pre foreclosed houses, consider taking a weekend course or completing an online program to help you become aware of both the benefits and the risk to this type of investment.