Many banks large and small offer financing for those foreclosure home buyers and real estate investors who are interested in buying their foreclosed homes (Real Estate Owned - REO). See bank foreclosures listing for banks that offer mortgage loans to support your purchase of their REOs.

Refinance option in buying foreclosures

If you have about 30 percent equity in your home, refinance may be an excellent option when you want to buy a foreclosure home. Refinancing really helps in reducing your monthly payments especially you can:

get a lower interest rate than your current interest rate and
extend the maturity of your home mortgage loan.

Home equity lines of credit to buy foreclosure homes

They are also called second mortgage loans. There are 125 percent home equity loans that you can get extra cash. Home equity lines of credit keep your first mortgage untouched. In general, you pay higher interest rate on second mortgage loan, as these loans cannot be sold in the secondary market, as it is the case for first mortgage loans.

These loans help you pay your down payment when you buy a foreclosed property.

Adjustable Rate Mortgage (ARM) loans

ARM loans carry lower interest rates especially in the initial years allowing you to reduce the amount of your monthly mortgage installments. When the interest rate starts going up, then you may consider refinancing or obtaining a new loan with better terms.

You may consider ARM when you plan to sell or flip the foreclosure property in a short period of time.

Always add financing as a contingency in your offer to buy foreclosures (see listing of other foreclosure contingencies).

Personal or unsecured loans

It may work well if you have a good credit. Again, this may work well for you when you want to flip or sell foreclosure home in a short period of time.

Bad credit? No problem!

Due to layoffs and bad economic circumstances, some people fail to make payments on time. Many financial institutions are willing to extend loans to such people considering this fact of life. They are called sub-prime lenders. You may expect a higher interest rate. Interest cost won’t be a problem for you if you flip properties quickly.

One major difference in the real estate business is existence of collateral. Lending institutions do not depend on your signature but rather use your house as collateral in case you don’t pay.

Sub-prime loans are lower-rated loans extended to borrowers with damaged credit. After your successful buying and selling foreclosures at a profit, you may repair your poor credit in a short time.

Events that hurt personal credit history

Bankruptcy, charge offs, collection, repossession, mortgage loans, car loans, slow or late payments, past due payments, public record postings, excessive credit inquiries, loan rejections, lis pendends, and foreclosures.