How to get a mortgage for a foreclosed home is no different than getting a mortgage for a regular home except for two things. These two things are time and repairs. Most foreclosed banks want the home to close in less than thirty days and some banks will not make repairs on the property either.
When there are major repairs such as needing a new roof, the bank may require you, the borrower to make these repairs. Investors or individuals trying to get a mortgage for a foreclosed home must be prepared with funds to correct the default of the property or have a fairly large amount to put down towards the loan. Banks who have a 20 to 35% down payment, in some cases will ignore defaults of properties. Foreclosed homes do not usually come with warranties, so "buyers beware."
- How to Qualify For a Mortgage for a Foreclosed Home. In order to qualify for a mortgage for a foreclosed home, you will need to have several items: bank statements to show proof of down payment, proof of employment, proof of marriage, proof of income and marriage certificate. The bank will want to see a couple who has been married for at least one year. If self-employed, the borrower must show the last two year's taxes.
- Money Required Upfront When Obtaining a Mortgage for a Foreclosed Home. There are two things that will require upfront fees from the borrower when applying for a foreclosure mortgage. The two things are: credit report and appraisal report. Some banks will allow the borrower to pay for the appraisal through escrow, but almost always the borrower must pay for the credit report upfront. The bank will check all three bureaus and look for a FICO (Fair Isaac Corporation) score of more than 700, except if the borrower is using an FHA insured loan. FHA insured loans will allow a lower FICO score and sometimes as low as 600 with good explanations as to the reasons for the delinquencies on the credit report.
- Length of Time to Complete a Mortgage for a Foreclosed Home. Most mortgage loans can be completed in 30 to 45 days if all the paperwork is in line. The length of the application process will depend on many things including: appraisal report, verification of employment and ordering bank statements. In some cases employers are slow in returning proof of employment forms to the lender so this may delay the process. Bank statements are also needed, so if the borrower does not have copies at home they will need to be requested which could take one to two weeks. The final reason for a delay in getting approval on the foreclosure mortgage is the appraisal report. The report may not agree with the selling price of the home and both the Broker and mortgage lender must contest the report. All things being considered, a borrower who has his paperwork in line, money in the bank and good credit can get a mortgage for a foreclosed home in 30 days or less. How to get a mortgage on a foreclosed home is not the only question here, but getting the best loan interest rates, terms and payment schedule is. Buying a foreclosed home can save the borrower lots of money, if the loan itself is ideal and satisfactory to all parties involved.