Buying Another Home Before Foreclosure – Can it Happen?

October 24, 2008 at 11:21 pm Leave a comment

I received a call from a homeowner who wanted to keep his house, if he could get the bank to modify his loan. During the course of our conversation, he asked if it would be okay for him to buy another home at a much better price, while his credit is still good, and prior to being foreclosed on.

Let’s take a look at what he would need to do to qualify for both loans.

Aside from good credit, our caller has to prove that he has enough income to pay for two mortgages (the old house and the new house). He also has to put down at least a 20 percent deposit in order to buy a second home as an investment.

I have heard that some people who have been foreclosed on are using a family member or friend’s good credit and income to purchase a new home. If this is so, that family member or friend will take ultimate responsibility for paying the loan and his or her credit is in jeopardy if the true homeowner defaults on payments.

Before getting yourself into any of these housing transition strategies, consult a reputable and honest lender. What you don’t know may bite you later on and may cost you a lot of money, if you are found guilty of mortgage fraud.

The best advice I can give anyone is to live within your means. If you are looking to buy another home someday, now is the time to increase your income or spend less and save more money for your future down payment. The sooner you build up your reserves, the better position you will be in to take advantage of the incredible buys in today’s real estate market.

Entry filed under: Arizona Real Estate, Chandler Real Estate, Foreclosures & Short Sales, Phoenix Real Estate. Tags: , , , , , , , .

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