The Internet has helped to simplify the foreclosure home buying process, by allowing potential home buyers to peruse listings online, either for a monthly fee, or in some cases, for free. Areas with high concentrations of distressed properties are usually the best place to find good deals, but it is important to examine the neighborhood closely before you purchase a home on impulse. This article will provide some tips to help you find the right home for you

There are two main options for purchasing foreclosed homes: through auction, and through the purchase of a real estate-owned or REO home. Although many people do use auctions to find their homes, you should keep in mind that doing so means that you are purchasing a home sight unseen, without taking the time to have a home inspection done. Depending on the age and the condition of the home you purchase, this could result in some very expensive repairs. REO homes, however, are usually brought up to the standards of the neighborhood before they are listed. And of course, purchasing this type of home gives you the opportunity to make sure that it is the right one for you, before you take ownership.

REO foreclosed homes are not always a bargain, however. Sometimes, homeowners in foreclosure actually owe more on their mortgage than what the property is actually worth. If you purchase an REO home where this is the case, you may be assuming a loan that is overpriced, so you owe it to yourself to research home values in the area to make sure that you are getting a fair deal. Even if a foreclosure is overpriced, you may be able to negotiate a short sale with the bank. A short sale is when a bank or lender agrees to accept a lower price for a home than the amount that is owed on the mortgage. Often, these types of sales are in the best interest of banks, which typically spend $25,000-50,000 during the course of the foreclosure process.

When exploring your options for purchasing a foreclosed home, it is important to do your research. Find out everything that you can about the demographics and average home value of the neighborhood that you are interested in buying into. You should also make sure that you are not purchasing a home with severe structural damage, no matter how good of a deal it may seem to be”unless of course you are willing to make some major repairs. Follow the tips in this article, and you will be well on your way to finding the foreclosed home that is right for you.

The foreclosure news just keeps getting worse. Home foreclosures have been at record highs ” this is no surprise to anyone following the news. What is most surreal in the whole calamity is that those who are most responsible seem to be the ones getting bailed out.

When something of this magnitude happens, there is plenty of blame to go around. And it starts from the top ” the government induced policy changes and support of Fanny Mae and Freddie Mac that led to such mediocre lending practices. Certainly the blame must start there.

Then comes the Banking and Lending institutions in general. We seem to forget that companies are first and foremost accountable to their stock holders. In other words, they are in business to make money. Often times making money is in direct conflict with doing the right thing. Corporate greed clouded the judgment of many financial CEOs and, we, the average consumer are now paying for that greed.

We have a long standing history in America of lending practices that are solid. The typical structure of a home mortgage has largely remained unchanged for decades. Sure there have been a few different flavors, but nothing like what was introduced in the past few years. We went from 30 year fixed rate loans with 20% down, to zero down programs and even 125% refinance options with crazy interest only multi-year payment options. And that doesnt even begin to touch on the issues of variable rate loans and just how out of control they became. Take a look at how popular search terms like “foreclosure” and even the oft miss-spelled “forecloser” have become and you will see that this is an epidemic at this point in America.

I am a die-hard capitalist and believe whole-heartedly in the capitalist system that the United States of America was built upon. But where is capitalism when failed management policies are not allowed to fail? As a small business owner, I know that if I ran my business the way the banks ran theirs Id have been bankrupt a long time ago. And I dont think there would have been anyone trying to give me money to stay in business.

Why have these CEOs not been held accountable for their deeds? Don’t take it the wrong way, I have no problem with big multi-million dollar executive incomes ” none at all. Our capitalist country has always rewarded those who have done well. Bring me a CEO that creates $200 million in profits for a company and I have no problem whatsoever in that CEO being rewarded with a $2 million bonus at year end. However, we have become a society of entitlement views. Lose the big salaries and give performance based bonuses ” isnt that really what the capitalist system is about? Performance.

During a conversation the other day, a new Note Buyer told me that he decided to start investing in buying defaulted mortgages. He had been wholesaling properties for a very long time prior to this.

The thing that worried me was when he made the following statement. He told me that the reason why he was getting into the business of buying defaulted mortgages was not only for some good cash flow, but also to keep people in their houses.

Don’t get me wrong. I’ll be the first to admit that Humanity counts. But…

Make sure you are looking at the bigger picture.

When Buying Defaulted Mortgages, Don’t Only Focus On One Exit Strategy

It will not work.

A SINGLE exit strategy for the defaulted mortgages that you buy may be what you want to pursue. (in this example he was looking to hold all the notes as cash flow by modifying them and getting them to re-perform).

How To Buy Defaulted Mortgages: Multiple Exit Strategies Are Needed

You have to be like Rafael Nadal in order to invest successfully in defaulted mortgages.

Nadal can do it all. He has a great serve, an awesome forehand, and can play an excellent game on both the grass and clay court.

You should have the same approach when you are buying defaulted mortgages. Have the ability to pursue multiple exit strategies at once in your note buying business.

Don’t get stuck with just one note buying strategy.

Using Foreclosure as a Buying Defaulted Mortgages Tool

When trying to modify a loan, sometimes the only way to get a borrower to cooperate with you is to start the foreclosure action.

Why?

Sometimes people need a wake up call, like a foreclosure notice to get them to take control of their situation. If they have been missing payments on a regular basis with no real threat, why take action? The notice combined with your help to modify their loan may be just what they need.

Don’t be like the investor I talked to. Don’t fall into that trap.

Don’t think that 1 Exit Strategy to your Defaulted Mortgage Buying business is enough to make you successful.

To do well in the note buying business, know all of your 5 Exit Strategies.