Along with giving you tips on how to buy foreclosure homes, this video explains the foreclosure process, the foreclosure laws and the benefits of buying a foreclosure to first-time homebuyers. Among these tips are pre-qualifying for a loan, hiring inspectors, running a title search and hiring a realtor.
Depending on your state, the foreclosure process is either judicial or non-judicial. Judicial foreclosures require the lender to sue the homeowner before it can foreclose on the house. In states that allow both foreclosures, the foreclosure process followed depends on whether the loan contains a power of sale clause.
The foreclosure process begins when the homeowner defaults on the loan and is issued a notice of default. Homeowners who fail to alleviate their default are issued a notice of sale, and their homes are listed at auction. Homes that do not sell at auction become bank owned as Real Estate Owned (REO) properties.
Auctions are very common and are great deals if homebuyers predetermine their maximum bids beforehand. Short sales help all parties involved by allowing homeowners to pay off their loans to their lenders. REOs allow the homebuyer to buy directly from the lender, and government REOs are usually well maintained.