Need urgent help with Auction financing
All,
Apologies if this question has been asked and answered before. I tried to look through the messages and could not find what I was looking for. Your help is truly appreciated.
I am trying to buy a property at a foreclosure auction. The property is in a fairly good condition and the auction price is likely to start well below the Fair Market Value (No minimum bid published but the outstanding loan which is upwards of 200k is nearly 150k less than FMV). The owner seems to have abandoned the property - not clear why. Bank is foreclosing and bringing it up for auction next month. I have checked for title liens, HOA liens, Property tax liens, outstanding utility bills etc, and everything seems to be in the clear.
The county where it is being auctioned allows only cash/cashier's checks at auctions. I have savings to cover the bid at the auction in cash. But I would like to get regular financing via mortgage for the home post-auction (if everything goes well and I get the home at auction).
The mortgage lender I have worked with in the past claims that once I buy the home at auction, I am no longer eligible for regular mortgage financing. I will be eligible only for Home Equity Loans (at higher rates of interest). The reasoning is that mortgage is given only when I am purchasing a home from somebody else, and I cannot sell the home to myself. Is this a true statement?
One other possibility that has been suggested is that I open an LLC, and purchase at auction with title to the LLC. I can buy the property from LLC, and get mortgage financing in the process. Is this possible? My FICO is excellent and I have pre-approvals for amounts upto 450k.
As you may have inferred, this is my first attempt at auctions and REOs. I feel that my situation is not uncommon. What do other investors do for financing auction properties?
thanks,
- Nathan in Texas