Buying property in foreclosure?
Dear Dave,
I have heard you talk several times about buying foreclosure properties and that it may be a good way for people to get into a starter home if you are very careful. I wanted to find out what is the best way to find them and how do you know if you are buying a good deal.
Kevin
Cincinnati, Oh.
Dear Kevin,
The way I used to find them when I was buying them for a living was through the legal notices. Larger cities like yours have legal newspapers that publish all of the incorporations, deaths, births, bankruptcy filings, foreclosures, etc. Anything that has to have public legal notice gets put in that publication. I would just grab that paper and look at the new listings, and then I would jump on those quickly and see what is owed against them. If there is a $100,000 that has $90,000 owed against it, then that is not a good deal of course, so move on to the next one. If the next one is in a neighborhood that is a hundred thousand dollar neighborhood and only has $50,000 owed on it, that could be your good deal and is worth checking out. You know if it is a good deal or not by checking what is owed against it compared to what it is worth. Simple enough.
The best place for a beginner to buy a foreclosure is from the individual who is losing the house, before the sale occurs. As long as you close on the sale prior to the sale occurring, it stops the foreclosure process. They own it up until the day the hammer drops, so to speak. There is usually a fairly short window of about three or four weeks for you to act on it and get it closed, so you need to move fast. And the people have to want to sell it also. For instance, if they owe $50,000 on a house that is worth $100,000, and they know they will lose the house in two weeks, they may be willing to take $60,000 for the house because $10,000 equity is better than losing the house outright in two weeks and damaging their credit with a foreclosure. This is something you want to do only if it is a good deal for both parties. I have even helped people look at other options if I thought they had some options before going through with a deal. It will probably take six months or so before you find a deal worth doing, so you should start looking as soon as you can.
Dave
Joined CCCS how can we fix our mess what problems we’ve created?
Dear Dave,
While my wife and I were in college, we both used credit cards to supplement our incomes and for our expenses. After college I went to work and she stayed at home for a couple of years because we had a new baby. We were slowly getting further and further into debt because we were barely able to make the minimum payments on the cards. Soon we joined CCCS not knowing that it could possibly cause problems when we wanted to buy a house. Knowing what we know now, we want to do whatever we can to clean up the mess we have gotten ourselves into. We have been paying things off recently, and we would like to get into a house soon. Do you have any suggestions that might help us clean this up?
John
Greensboro, N.C.
Dear John,
The fastest way, John, is to get out of CCCS today. Going into a debt management program such as Consumer Credit Counseling Service (CCCS) or Ameridebt for instance is the same as filing Chapter 13 bankruptcy when it comes to getting a home loan. Fannie Mae guidelines and FHA guidelines count debt management services the same as filing a Chapter 13 bankruptcy.
Getting out today would be setting a date for when it was over in the eyes of the mortgage lender. So you need to get out of CCCS and start managing your debt yourself so that the clock starts ticking. The faster you can do that, the faster your credit will repair; and in this case, time is the repairing element. In the meantime, of course, you know not to borrow any money whatsoever, and to get intense and focus on the goal of paying off your debt as soon as possible. If you need to take an extra job, do it. If you need to sell some stuff, do that too. Live like no one else for a while and work on it really hard, and then later, you can live like no one else.
Dave
SPECIAL OFFER:
In a very special, limited-time offer for WorldNetDaily readers only, you can receive two of Dave Ramsey’s highly acclaimed, straight-talk, motivational videos in one special package, plus a free book – well over $60 worth of Dave Ramsey’s best products for less than half price! Order, or learn more about, Dave Ramsey’s Special WND ‘Financial Peace’ Package at ShopNetDaily!
