It’s never a good thing when there are lots of foreclosures hitting the market. It means people are losing their homes and that the economy is likely in the dumps. However, where there’s misfortune sometimes a fortune can be made. I’ve had several friends invest in foreclosures and discovered that there are more ways than you’d think to quickly finance a foreclosure.
Traditional Mortgage. Of course, if you have the time (not at an auction) and the house is in good enough shape to meet the traditional mortgage guidelines, you can get a traditional mortgage. The good news is that this is usually the lowest interest rate you can find. The bad news is that this type of loan takes the longest to secure.
Home Equity Loan. This type of loan is only available to those that have a lot of equity built up in another real estate investment, but it does have its advantages. Home equity loans are fast and somewhat easy to obtain, and they offer rates close to those of traditional mortgages.
Bridge Loans. A bridge loan is another alternative. Its possible to get a fast bridging loan approved and funded within a few days. The disadvantage is that you’ll have to pay a higher interest rate than for a traditional loan.
Hard Money Loans. A hard money loan is similar to a bridge loan, but instead of financing it through a traditional lender the money comes from a hard money lender. Hard money lenders require a lower loan to value and usually charge a higher interest rate than other loans.
Credit Cards. If the foreclosed property is cheap enough, you can use cash advances from your credit cards to pay for the property. While this isn’t typically recommended, it actually makes sense in some scenarios.