Continued from Part I - Pre Foreclosure Information after the Banks' Acceptance

Using a Mortgage Broke when Buying a Pre Foreclosure

A mortgage broker or bank may also lend you money. Let me say again, in a short sale, you are getting this discount because you told the bank you can close fast. So you must already be pre-approved for a loan with them.

The mortgage company will need to do the work early in the pre foreclosure process and take less time to close after you receive your acceptance from the short sale bank and still get the money to you in time to close within the 30 days you committed to. The mortgage company/bank will also want to do an appraisal on the property before they lend any money.

This could be a deal breaker or it could be a blessing. I've had some property values drop significantly during the length of negotiations so the great deal you think you're getting up front might not be so wonderful when it comes time to close.

Proof of Funds

Whichever of the 3 lenders you choose to use, don't forget to have a proof of funds letter signed by that lender. This document tells the foreclosure bank working the short sale offer that you do have the money when it is time to close. This will give credibility to your bank.

You're Going to Do the Repairs

Does this mean you're actually going to be swinging the hammer and pounding the nails after you close on your pre foreclosure real estate or are you going to over see a handyman/carpenter or general contractor doing the repairs?

Didn't realize there were so many questions to answer, did you?

I recommend doing one rehab yourself. Not a big job, but enough to get an idea of:

* the cost of the repairs necessary to complete a rehab

* the length of time it will take to get it complete

* what possible delays could come up

* difficulty of finding someone else to do the repairs you don't know how to do

* the value of your time on a job and

* can you be doing something to make more money with your time than repairing the house

All these things are necessary to know when you are having someone else bid the complete job. You have to know if their prices are in line with what you can do it for. It the repairs they tell you are necessary are really necessary.

There is a lot you will learn when you do your own rehab. I believe it's imperative you do one rehab yourself. And after that, your time is better spent writing your pre foreclosure marketing, finding your per foreclosure real estate and making the deals.

More info on your stop foreclosure information search:

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