Buying bank owned homes with government grants can help buyers and real estate investors maximize housing dollars. Bank owned real estate consists of foreclosure properties which have been returned to the servicing mortgage provider. These properties are often priced below market value to entice a quick sale.

Bank owned homes are sold through various mortgage lenders or their assigned real estate agent. It is generally easier to scout out foreclosure properties through realtors instead of looking for banks offering homes for sale.

When properties are sold through banks, buyers present offers to bank’s loss mitigation department. When properties are sold through realtors, buyers submit offers to agents who pass them along to lenders.

Bank owned real estate can encompass all types of properties including residential, commercial, and raw land. The majority of foreclosure properties are priced 10- to 20-percent below the appraised value. Properties are sold in ‘as-is’ condition and are not protected under any warranty or guarantee. Therefore, buyers must engage in due diligence by obtaining property inspections and appraisals.

The Department of Housing and Urban Development initiated the Neighborhood Stabilization Program which offers grant money to buyers and investors who purchase real estate in areas with high foreclosure rates. NSP grants must be used to rehab houses, demolish blighted structures, or redevelop demolished properties or vacant land.

HUD is required to set aside 25-percent of NSP funds and provide grants to investors who buy properties to offer housing for low-income residents. Investors who specialize in affordable housing can apply for certification as Section 8 landlord to receive guaranteed government subsidized rental payments.

Real estate investors are allowed to obtain five NSP grants, while qualified individuals can obtain one housing grant. Applications are submitted through local HUD/NSP offices. Detailed information and a list of offices is available as HudNSPHelp.info.

Buying bank owned real estate isn’t much different than buying property listed by a private seller. The process can be a bit more complex and usually takes longer than when buying from individuals. Some people prefer to work with a foreclosure specialist, while others become educated about the process through online research.

Bank owned properties can make a great starter home, vacation home, or primary residence. They can also make great investment properties. Many real estate investors buy bank owned foreclosures for the sole purpose of using as rentals. Oftentimes, investors offer owner will carry financing options such as lease purchase option agreements or seller carry back trust deeds.

Owner-financing is becoming a popular trend as more and more homeowners are forced out of their homes by foreclosure. Both parties can minimize risks by conducting credit checks and executing legal real estate contracts.

Investors often turn to Fannie Mae Homepath properties as a source for affordable rental real estate. Fannie Mae Homepath encompasses nationwide repossessed foreclosure houses. Investors can apply for financing through Home Path Mortgage to obtain reduced interest rates, down payment requirements, and closing costs. Details of the program are provided at HomePath.com.

Taking time to learn about the various government-sponsored programs and financing options allows buyers to obtain the best return on investment. In today’s economy every penny counts. Qualified applicants can potentially save thousands of dollars by taking advantage of available programs.

Author Bio: Discover more ways to buy bank owned properties at discounted prices from California real estate investor, Simon Volkov. He shares insider-secrets and a bounty of investing information via his website at www.SimonVolkov.com.

Category: Real Estate
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