Talk to a realtor in your area. They handle foreclosed properties all the time. If you think tht it's easy to just show up at the courthouse steps for an auction, think again, it's not a simple process. Get someone to help you, and that will be a realtor who can guide you thru inspections, financing and other intricacies.

I understand it is not a quick or simple process; I'm not sure why you'd assume I'd think it was. There are other issues we are sorting out in regards to purchasing this property; we are consulting the appropriate professional for that. I had a specific question about what was required to get proof of financing for one, and I'd thought I'd get a general idea from this forum while I was waiting to speak to our bank. But, hey, thanks!

"I havn't had a chance to talk with our bank."

You need to call a lender(s) and see what you might qualify for. You should have done that before you started looking at houses.

Prior to the credit meltdown, a lender let us use a HELOC on the first home as the down payment on a second. We still had to have the income to be able to afford both mortgages though. Most places have stopped that kind of speculative lending now. They have enough questionable loans on their books and aren't looking to make more.

Hi CarmenAL,

Your Realtor®'s a bit confused or misinformed... the fact that you are wanting to buy a foreclosed home (assumedly already takend back at auction by the bank... aka "REO" for "real estate owned",) has nothing to do at all with your ability or non-ability to qualify for bridge loans.

True "Bridge loans" are based on your equity position of your existing home, and require that you give the new mortgage on the new home to the same "bridge loan" lender (usually at a non-competitive premium) in return for their "bridging the gap." Unfortunately, currently, bridge loans lenders are all but extinct.

If you cannot qualify for both mortgages at once (and don't assume that is necessarily true unless/until you have had a SKILLED originator analyze your data,) then there's really no way around the fact you'll have to get the old home sold before you can close on the purchase of the new home.

Since willing & qualified buyers are so rare in the current markets, you *MAY* be able to get the REO bank to accept either a purchase offer WITH a contingency on the prior home sale, *OR* a purchase offer with an extended escrow period (3-4 months) to give you time to aggressively price & market your old home for sale.

Luck!
Dave Donhoff
Leverage Planner

Also, your own bank might be the worst possible lender in your area at this time, or they could be the best. Just because you have an established banking relationship with one institution, does mean anything about what they are currently lending on.

A friend who is a realtor here gets weekly (or more often) updates on all the lenders who are currently financing in this area, and it changes all the time. So again, ask your realtor for referrals to lenders.

Thanks, Dave, for posting your information. I knew banks had tightened up; I didn't realize an entire class of financing had disappeared, even to low risk borrowers. It turns out all we need is to prequalify. We've never bothered with it in our other home purchases, and our purchases have always gone off without a hitch. We will prequalify just fine, even without having our house sold. Thanks-