Do I have to pay the full amount by cash if I am purchasing a foreclosure house?

Asked by Eujeen, Brooklyn, OH Sun Oct 26, 2008

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Trevor Curran, Mortgage Broker Or Lender, Great Neck, NY
Tue Jun 19, 2012
Dear Eujeen,

I've been helping First Time Buyers for 22 years as a mortgage professional and I will tell you what I have always told my clients here in New York: If you are a First Time Buyer, steer clear of foreclosures and short sales.

Foreclosures are someone else's headache. The home probably has not been well-maintained and you're a First Time Buyer adjusting to paying a mortgage. Do you really want to walk in the door to someone else's deferred maintenance that YOU will have to pay for? Also, if you're thinking there are deals to be had in terms of lower prices, mostly those "deals" go to professional investors who can pay cash, negotiate hard with a Lender, and close fast. If you are one of those professional investors, then that's a different story. and I wish you luck!

For Short Sales, my attitude of late is that First Time Buyers should steer clear. Short Sales tend to be a better deal for the homeowner than for the Buyer. You'll wait MONTHS for the homeowner's Lender to approve the short sale; maybe as long as Six or Seven Months. Meanwhile, you're stuck in a contract to buy that home. I closed a short sale recently with a Buyer who, after seven months said this at the closing table, "I don't even want this house anymore."

And he didn't even get the "deal" on price he thought he was getting! The house appraised for only slightly more than he paid for it at the short sale price. He walked into this deal thinking he was buying a home for $100,000 less than it's value. In the end that wasn't the case.

There are plenty of motivated Sellers with their homes listed on your local MLS. Go find a good Local Mortgage Banker, get prequalified, then find a great, experienced Realtor, and buy the home you want at the price you're willing to pay. It's a Buyer's Market, after all!

Trevor Curran
NMLS #40140
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Mitchell Fel…, Agent, Brooklyn, NY
Wed Oct 29, 2008
Assuming it will be your primary residence, if you were to purchase a HUD foreclosure you may only have to put $1,000.00 down and if you are qualified you can actually finance the rest and your closing costs! Just remember, the more you borrow, the higher your monthly payments will be! Generally speaking you can always get a mortgage on a foreclosure although some banks may be leary if the utilities are turned off or not working. Many times you will want to turn the utilities on after you go to contract and most of the time you would have to do so under YOUR own name! If you want, visit the HUD web site at "http://www.hud.gov/homes" and all the instructions are there.

Food for thought, usually when a buyer get a good deal it does not involve a foreclosure, but rather a motivated seller. If you like I may have properties that would meet your needs where you can also get a great deal. If you have any further questions or if I can be of further assistance, feel free to contact me.
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