Buyers Of Foreclosures Get The Same Mortgage Rates As Everyone Else

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After months of state law-induced slowdowns, foreclosure activity is on the rise. The foreclosure market looks ripe for this season's home buyers.

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Foreclosures Up 7% In October

According to foreclosure-tracking firm RealtyTrac, October's foreclosure filings rose 7 percent to 231,000 filings nationwide.

A "foreclosure filing" is a catch-all term, defined by RealtyTrac. It comprises (1) Default Notices on a home; (2) Scheduled Auction for a home; and (3) Bank repossession of a home.

Because of how RealtyTrac defines "foreclosure filing", then, a single home can actually account for up to 3 foreclosure filings -- one for each step through the foreclosure process.

This can make foreclosure figures look "worse" than their reality. It's why we should separate RealtyTrac's foreclosure report into "event types", then make comparisons from there.

For each category in October, it's clear foreclosures are trending up :

• Default Notices : Up 10% from September 2011; Down 31% from October 2010.
• Scheduled Auctions : Up 8% from September 2011; Down 38% from October 2010.
• Bank Repossessions : Up 4% from September 2011; Down 27% from October 2010.

These breakdowns suggest that, although improved as compared to last year, the foreclosure market is growing. At least, it's growing in some parts of the country.

Like everything in real estate, foreclosures are a local phenomenon.

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Foreclosures Concentrate in 4 States, Led By California

In October, just 4 states were home to more than half of the nation's foreclosure filing. Meanwhile, those four states -- California, Florida, Michigan and Illinois -- represent just 26% of the U.S. population.

Clearly, foreclosures are geographically concentrated.

Even on a per household basis, the figures are disproportionate :

• Top 10 Foreclosure States : 1 foreclosure per 341 households, on average
• Bottom 10 Foreclosure States : 1 foreclosure per 7,434 households, on average

The nationwide foreclosure rate was 1 foreclosure per 563 households.

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Buying A Foreclosure? You're Buying "As-Is".

Foreclosures can be exciting. In some markets, they are not only plentiful, but they sell at steep discounts, too. It's no wonder foreclosures account for 18% of home resales nationwide.

But just because a foreclosed property is a "deal", it doesn't mean you should rush to buy it. Buying a bank-owned REO is a different process frought with different risks as compared to buying a non-foreclosed home from a "person". With foreclosures, the contracts are different, the negotiations are different, and you're often buying a home as-is.

"As-is" is foreclosure-speak for "this home may have defects".

Before writing a contract, make sure to know what you're buying and -- if you need a mortgage -- be absolutely certain the home can be financed. Certain defects can render a home unlendable for FHA mortgage programs and via conventional financing, too.

Get A Mortgage Rate For Your Purchase

Buyers of foreclosed homes get the same mortgage rates as everyone else so once you've picked out a home, start shopping for rates. Whether you own more than 4 properties, or need Delayed Financing, banks are ready to lend.

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