Possible Foreclosure deal, I need advice

6 Replies

I'm fairly new to REI and I came across a foreclosed home that I'm strongly thinking about purchasing. It's a beautiful home that my fiance and I want to live in. the bank is asking 740K for it, and it was last listed in March for 1.5M. it sold in March and just foreclosed a week ago.

Now what I was wondering was, is this a good price for this home? I would think so, if it just sold for over a million dollars just in March and they only want 740K.

Another thing, if it does appraise for about 1.2- 1.3M I would want the equity in the home. Could I get that equity upon closing, purchasing the home? Or would/should I wait a few months and refinance to get the equity? I was thinking of waiting 3-6 months and refinancing with an MTA loan if I couldn't get 80% upon purchase.

Blue—If a property sold in March, it could not be foreclosed upon in May. The process takes longer than that. In the public record you can see if the recent transfer is between people or banks. Sometimes a foreclosure is listed as a sale. Say you borrowed 1,000,000 for the purchase. If the bank forecloses, it might look like like the bank purchased the property for 1,000,000 when it is just a foreclosure. If you are buying a foreclosure, the bank that owns the property has probably had a recent appraisal on it. Ask the agent to get the appraisal. Maybe there is a Broker’s Price Opinion also. Ask for that. The real estate agent should be able to get these things for you.

As for your question on the refinancing. yes, there are lenders that will refinance the house without seasoning of title, many more will do so after 3 months of seasoning and even many more after 6 months. Seasoning of title means: if lived there 1 week = 1 week seasoning, 3 months = 3 months seasoning etc.
Yes you can refinance and cash out. Best way if possible to do a fixed rate second lien home equity loan. less closing cost and fast but you need decent credit score (660+ for stated income) or if full doc of your income is possible then even lower scores can get this done. these are very general guidelines.
I am a mortgage broker in FL; in the event you are asking.
P.S. second liens are typically higher rate than first liens but the closing costs are less. Depends what you want to do (your objective; long and short).

Originally posted by "Blue103":

Another thing, if it does appraise for about 1.2- 1.3M I would want the equity in the home. Could I get that equity upon closing, purchasing the home? Or would/should I wait a few months and refinance to get the equity? I was thinking of waiting 3-6 months and refinancing with an MTA loan if I couldn't get 80% upon purchase.

Before rushing to tap into the equity decide how you can afford the payments. Also decide if you are holding or selling. If you expect to sell how long can you wait to find a buyer given the monthly holding costs.

The equity is not really there if you can not get it out without hitting the wall.

John Corey