What You Need to Know About Using a Florida Home Mortgage on Foreclosed Property

Across the state, there are affordable housing proposals on the table, all meant to give hopeful owners an easier opportunity to put a Florida home mortgage to use. However, interest rates are still high and the market is still cook.

Subsequently, many house bargain-hunters are turning their attention to foreclosures.

They hope to get good deals by buying from homeowners who are falling behind on their Florida home loans or by buying after the lenders have seized such properties. Websites that specialize in these properties all report an increase in listings.

“For the right buyer, foreclosures are an excellent opportunity to buy a house at a lower than market-value price,” says Tim McCloud, an agent with Kelley Realty in Green City, Ohio, who specializes in selling foreclosed properties on behalf of the lenders.

With all this in mind, here are a few things you ought to know about this different way of house hunting:

Tapping Pre-Foreclosures

Buying property in a pre-foreclosure stage - the period between when the owner receives a Notice of Default from the lender and the day the lender puts the property up for an auction - may offer the best bargains, but it’s also the most difficult.

For starters, you have to deal directly with the owner of the house, who may not even be aware that the house was made public in a foreclosure listing. That could be awkward.

“These people don’t ask for their properties to be listed on our Web site,” says Alexis McGee, founder of Foreclosures.com. Rather, foreclosure sites receive their listings from county recorders’ or clerks’ offices because notices of default are public records.

Auction Risks

If purchasing pre-foreclosures is tough for the regular home buyer, buying at an auction can be downright impossible. For one thing, you have to pay cash because financing auctioned properties isn’t allowed. No Florida mortgage loan use in this scenario.

You’re also expected to buy the house sight unseen. On top of that, you’re not allowed to get title insurance: If the house has a $100,000 tax lien attached, the new owner will have to pay it off.

Foreclosed Deals

If no one shows up on the courthouse steps, or there are no bids high enough to cover the outstanding Florida home loan, the bank will take ownership of the property and put it up for sale. This is the easiest way to buy foreclosed properties, but you’re also least likely to get a discount, as the bank will typically put houses up for sale at or close to market value.

Bank-owned properties, also known as REO or “real estate owned” properties, are usually sold through real-estate brokers.

Government Homes

When homes that were bought with loans guaranteed by the Federal Housing Administration or Department of Veterans Affairs go into foreclosure, they’re put up for sale by the government itself.

For the first 45 days, a listing is available only for homeowner occupancy, which means you don’t have competition from seasoned foreclosure investors, explains Dick Esposito, owner of ADR Properties in Maryland, who specializes in buying and flipping HUD foreclosures.

“You get the first chance at all the good properties as a homeowner,” he says.

You can also use a Florida home mortgage loan for this purpose. Work with our brokers and we’ll find a way to finance that property in the fastest, most reasonable way possible to fit your budget.