How to Get the Money to Finance a Foreclosure Purchase

Published by julia | Filed under Buyer / Seller Tips, Miscellaneous, Real Estate, Shout Outs

Everyone knows that investing in foreclosures can be a highly lucrative endeavor. However, getting the financing for such properties can be a challenge. It can get even MORE tricky if you already have a mortgage on your primary residence. However, tricky does not mean impossible. Here are some avenues for foreclosure financing you may want to explore.

If you have good credit, you can often purchase foreclosures using an unsecured credit line, such as a credit card or personal loan from your bank. The loan will typically be referred to as a business loan, so it is in no way considered a mortgage. It’s a short-term loan that allows you to have the cash you need to get the property. Because it’s not meant to be a long-term loan, your primary business model for this type of loan should be to pay it off in full within a year or two, as soon as you sell the property for a profit.

You could also get the money to finance a foreclosure by getting an FHA loan. Be aware that FHA loans are not meant for professional real estate investors. These are for people who want to buy a foreclosed home to live in. In fact, many FHA loans contain guidelines requiring you own the property for a certain amount of time before you sell it again. It’s more of a long-term investment, but you can use the funds from the loan to re-hab the house in many cases, so when you DO sell it down the road, you can make a profit on it.

You can also pool money with other investors to buy a foreclosed property. This is a good option if you’re forming a company for the purpose of buying, improving, and re-selling foreclosed properties. With enough people willing to go in with small amounts of cash, you can easily get that great foreclosure deal you want, pay for it for cash, and have no strings attached on your future use of the property. As you can see, sometimes it takes creative financing to get a foreclosed property, but it’s still entirely do-able if you put your mind to it. WIth all the great deals out there right now, this is the perfect time to get into a beautiful foreclosed property for a fraction of its real value, which can spell profit for you later down the road, so take the plunge and give it a try!