Buying Foreclosures is a different process than buying a "retail" property.
You'll first need to decide whether you're going to pay cash or obtain a mortgage.
Here are the basics:
If you will be obtaining a mortgage- Obtain a Preapproval letter from your lender or mortgage broker. This will be generated by your bank or Mortgage Broker on their letterhead and signed by someone in authority. NOTE: This is different from a Prequalification letter as your lender will have checked all of your items and documents on your loan application and can issue a committment letter. You'll know how much you can afford to spend and be ready when a great deal becomes available.
If will be paying cash for your purchase and will not be obtaining a mortgage, then you'll need a Proof of Funds letter. This will be generated by your bank or financial institution on their letterhead and signed by someone in authority. This will state that you have funds on deposit in the amount of $xxx,xxx and can close on a transaction up to that amount.
Earnest Money Deposit. You'll need to make out a check for earnest money when writing/submitting an offer. Typically, the amount is equal to 3% of the purchase price if you are obtaining a mortgage and 10% if you are paying cash for your purchase. This must be made payable to the listing agency and will be deposited into an escrow account upon acceptance of an offer. These funds will be applied at closing to your purchase.
Disclosures. All foreclosed properties that are bank owned will require that you sign disclosures in addition to the purchase agreement.
Purchase Agreement. This is where you'll make your offer and indicate the terms and conditions of your purchase.
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