How to Buy Bank Forclosures With No Money Down

Become the owner of a bank foreclosure home without putting any cash down

When a bank forecloses on a mortgage loan, the bank retains ownership of the property until it can sell it. Generally, a bank will sell the foreclosed-upon property at a price that is below the market value, but is still enough to cover the loan balance they are owed on the property. If you're buying a bank foreclosure, it is possible to complete the purchase with no money down.

Instructions

1. Apply for mortgage pre-approval. If you're getting ready to shop for a bank foreclosure home, prepare your financing ahead of time by getting pre-approved for mortgage financing. Submit a mortgage application to your lender of choice and go through the mortgage application process without having chosen the property yet.

2. Obtain a letter of credit. The lender processes the mortgage application and approves you for a set amount based on your personal finances and information. Once you pre-approved, the lender provides you with a letter of credit, which is a pre-approval letter you can provide to the bank when you find a foreclosure property you're interested in buying.

3. Make an offer to the bank. Once you find a foreclosure home you're interested in purchasing from the bank, make an offer with the purchase price you want to pay.

4. Complete the purchase and sales agreement. A purchase and sale agreement is drawn up by the bank, a real estate agent or a real estate attorney when the bank accepts your purchase price offer. Both you and the bank must agree to the terms and conditions set forth in the contract in order for the sale and purchase transaction to proceed. If you (the buyer) qualified for a $200,000 mortgage and the purchase price of the house is $180,000, no down payment may be required, as long as the bank agrees to these terms.

5. Finalize mortgage financing. Provide the mortgage lender that pre-approved with the information on the home you're purchasing including a copy of the contract, which provides the home address, purchase price, etc. The mortgage lender then continues processing the mortgage using the property information.

6. Attend the closing. After the mortgage process is complete on the home, a closing is scheduled to transfer ownership of the property from the bank to you.

References

• How to Buy Bank Foreclosures