Buying a foreclosed or bank-owned home in New Hampshire

What's the difference between an auction, a bank-owned home and a HUD home?

At a foreclosure auction, the home is sold before the lender takes it back. Bidders usually need cash or certified funds on the spot and often can't inspect inside, so most people buying with a mortgage skip this stage.

If it doesn't sell at auction, the lender owns it. That's a bank-owned home, also called REO (real estate owned), and it's listed with a real estate agent like other homes. A HUD home is one the U.S. Department of Housing and Urban Development took back after an FHA-insured loan was foreclosed. HUD homes are listed on the HUD Home Store, and offers go through a real estate broker registered with HUD.

What does "as-is" mean?

The seller won't make repairs or offer the usual seller disclosures, because a bank or agency never lived there. You can still, and should, have the home inspected. Expect the seller's own addendum to the purchase agreement, with its own deadlines, and read it with your agent or a New Hampshire real estate attorney.

Can I use a regular mortgage on a foreclosed home?

Often, if the home is in livable shape. The appraiser reports on condition, and FHA, VA, USDA and conventional loans each have rules about safety, soundness and working systems. Common problems in empty New Hampshire homes include winterized plumbing, frozen or burst pipes, a missing furnace or water heater, roof leaks and mold.

If utilities are off, the appraiser or inspector may not be able to test the heat, water or electrical, so ask your agent how the seller handles turning them on for inspections.

What if the home needs work?

A renovation loan, such as FHA 203(k) or a conventional renovation loan, can roll the cost of repairs into the mortgage, based on the home's value after the work. That can turn a home a regular loan can't finance into one you can buy with one loan. The renovation loan guide explains the steps, contractor bids and timing.

What about homes Fannie Mae owns (HomePath)?

When Fannie Mae sells a home it took back through foreclosure, its rules allow some extras for buyers who will live there, such as a higher limit on seller-paid closing costs in some cases and a credit toward the appraisal cost passed to the buyer. Ask Tom whether the seller is Fannie Mae and what that means for your loan.

How do I make a strong offer on a bank-owned home?

• Get a full pre-approval that names the loan type you'll use, since many bank sellers ask for it with the offer.
• Tell Tom early if you're considering a renovation loan, because it changes the timeline.
• Expect the seller to take longer to answer offers and sign documents than a homeowner would.
• Keep your earnest moneyEarnest money A deposit you make when your offer is accepted to show the seller you're serious. It's usually credited toward your cash to close. See the full glossary× and financing deadlines on one calendar; see the contingency guide.

What extra checks matter?

Ask the title company about unpaid property taxes, liens and municipal water or sewer balances, which can follow a foreclosed property. Test a private well and septic system if the home has them, after the water has been run; the well and septic guide covers what to ask for. Plan for homeowners insurance early too, because insurers may ask about a home that's been vacant.