Investing in real estate through foreclosures has become a profitable option for many investors. Most foreclosed properties are sold through auctions, which means buyers usually need to pay the full winning bid amount on the same day or shortly afterward.
In other situations, foreclosed properties can be purchased directly from the mortgage lender that has taken back ownership. In these cases, getting traditional mortgage financing may not be possible, especially if the property is in poor condition and a lender is unwilling to accept it as collateral. Although auctions are more common, both situations often require buyers to rely on unsecured loans to purchase foreclosed real estate. Investors who plan to buy multiple properties may also consider unsecured lines of credit.
Many buyers simply do not have the cash available to complete the purchase immediately.
How Unsecured Loans to Buy Foreclosures Work
Unsecured loans used for buying foreclosures are obtained specifically for purchasing a particular property or multiple properties. Since these loans do not require the real estate as collateral, the lender will still want to know the purpose of the loan and details about the investment.
The key to using unsecured loans for foreclosure auctions is securing pre-approval before attending the auction. Because the auction requires full payment immediately or within a short timeframe, there is no time afterward to apply for a loan.
How Unsecured Lines of Credit to Buy Foreclosures Work
Unsecured lines of credit function similarly to credit cards. After approval, the borrower receives checks or a debit card connected to the line of credit and can borrow up to the predetermined limit. These funds can then be used to purchase foreclosed properties.
Lines of credit are especially helpful for investors who regularly participate in foreclosure auctions. They offer fast access to funds and allow buyers to know exactly how much capital they have available for bidding.
Unsecured Finances has over 10 years of experience in the consulting industry. We specialize in educating and assisting clients in obtaining Unsecured Business Loans and Start-Up Business Specialty Loans, including Unsecured No-Documentation (No-Doc/Stated Income) Loans, Unsecured Business Loans, and Unsecured Start-Up Business Loans. We also provide Lines of Credit ranging from $10,000 to $500,000 — all without requiring any assets.
