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Florida is the third most populous state in the United States. The state has over 20 different cities, ranging from metropolitan cities to tiny villages with fewer than 1,000 people. So, if you’re thinking of moving to Florida, you must know how to buy Pre-Foreclosure Homes in Florida. If you have decided to relocate to Florida or want to know about Pre-Foreclosure Homes in Florida, the information below will guide you through the process.
What is Pre-Foreclosure?
A pre-foreclosure refers to the phase of legal proceeding that can ultimately conclude the property being repossessed by a borrower that defaults on their mortgage before selling. The lender files a default notice on the property because the borrower outstrips the contractual terms due to negligent payments. The pre-foreclosure allows the homeowner to either sell the property or pay the outstanding amount of the loan. An investor can ideally buy a pre-foreclosure below the market value. Finding pre-foreclosures can be tricky. One needs to scout newspaper notices, call lenders, and reach distressed homeowners.
What conditions initiate Pre-Foreclosure?
Not all pre-foreclosures are in unsettling conditions or nasty neighborhoods. Financial setbacks are often one of the biggest reasons for foreclosures. Investors often find pre-foreclosures in areas they otherwise may not be able to afford. However, if the borrower doesn’t keep up with mortgage payments, likely, they can’t keep up with the repairs. Homeowners in pre-foreclosure are typically going through a financial crunch and may want to sell the property instead of having a foreclosure on their credit rating. Ideally, fix-and-flippers purchase the pre-foreclosures that need considerable renovation and then resell the property for a profit.
Steps to buy Pre-foreclosure Home in Florida
Let us explore the process of buying a pre-foreclosure property in Florida.
1. How to find Pre-foreclosure Leads in Florida?
The pre-foreclosure leads help select neighborhoods with fewer pre-foreclosures than regular listings. While there may be fewer pre-foreclosure leads, it is rather convenient to find a property close to your current residence because it allows ease and flexibility in making site visits and meetings with contractors. Bank of America’s Real Estate Center is a perfect place to start your search for Florida bank-owned homes. The real estate agent and mortgage loan officer assigned to you can help you understand the available loan solutions when purchasing a foreclosed home in Florida.
A. Off-Market Pre-foreclosure Leads
Off Market Pre-foreclosure, leads are difficult to find but not impossible if you know where to look. These leads can be found through notices in local newspapers public records at the local county clerk’s office. One can also contact real estate attorneys or ask real estate retailers for referrals. One may crack a better deal if the pre-foreclosure is bought before it hits the market. There is no real estate commission attached to pre-foreclosure and lesser competition from buyers.
B. Online Pre-foreclosure Listings
Few pre-foreclosures can be found on sale through multiple listing services (MLS) and accessed via real estate agents. They include terms like a short sale, motivated sellers, and third-party approval required. Apart from the real estate agent, one can find pre-foreclosure property listings in Florida on sites like Zillow, RedX, and Foreclosure.com. These websites provide data on how many homes are available, and at different stages of foreclosure, with a map and pinned locations in Florida.
2. Funding Line-up
Once you are sure about placing a bid on a house and want to experiment with buying it from an auction, ensure your funds are lined up and ready. Lining-up funds require knowing your maximum bid well and having access to cash to cover it fast. This is a difficult task to do.
Without an inspection, one cannot know the maximum amount he should pay, despite knowing what you can pay. Since the deal has to be closed quickly, primarily within 24 hours, often this leads to no room to work with a traditional Florida lender. After that, the buyer is left with limited options, like borrowing from kids’ college funds or moving money from the retirement account, unless you have a free flow of funds and have no problem risking them on a house you haven’t seen.
How does having a pre-approved letter help?
Before offering the property to buy a pre-foreclosure home, it is best to find a lender and get a pre-approved letter in Florida. Getting a pre-approved letter signals to the seller that you are a serious buyer, reducing the concern around defaults against the property. A pre-approved letter doesn’t necessarily mean you’re guaranteed a loan. It means the lender evaluated your creditworthiness to determine how much loan you can get. Money-lenders finance pre-foreclosures in almost any situation, whereas traditional lenders in Florida expect properties to be in decent condition or only require minor tweaks. any property with more than five units needs an apartment building loan issued by commercial financing unit.
3. Making an Offer
The offer you present to buy the pre-foreclosure home largely depends on the ability and strength of your financial commitment. This covers you for your deposit money if the financing needs are not met. It is advisable to collaborate with a real estate agent while making an offer because they are well-versed in the purchase contracts and contingent deadlines. If the Bank agrees to finance a short sale, you can work directly with the Bank. If everything ends well, you’ll have a great property that you can resell for a great ROI. This is at keeps real estate investors interested in auctions. However, e foreclosure timeline in Florida is extremely long, up to three-and-a-half years.
4. Can you buy a Pre-Foreclosure home with an FHA loan?
FHA-insured loans are calculated for owner-occupants and not investors. FHA restricts borrowers from employing its loan-support programs to purchase investment properties. If a borrower buys a foreclosed home with an FHA loan, he shall move into the house within 60 days of signing the loan documents. The borrower must ensure living it in for a majority of the year. An FHA-approved evaluator inspects the home and communicates its condition to the lender to ensure it meets guidelines.
FHA lends many advantages to the buyer of a foreclosed home in Florida. It offers high loan amounts. The increased limits give more opportunities to the buyers to use the program, especially borrowers in high-cost areas of the state. When considering pre-foreclosure homes, FHA requires homes to be structurally sound, inhabitable, and free of health and safety hazards. An FHA borrower may find it impossible to compete with investors as they often pay for homes with a significant down payment or in cash. FHA transactions mostly require repairs before closing to bring the house up to standard.
Wrap-Up
Buying homes through pre-foreclosures can be an excellent way for you to get a deal. Also, check how to make $500 in dividends.