The number of foreclosures in Texas is up and according to new RealtyTrac data, 1 in every 861 housing units received a foreclosure filing in May 2010, bringing the total of foreclosed homes in Texas to over 79,000 units.  The hardest hit areas seem to be in the San Antonio, Austin, and Dallas/Fort Worth areas.  In less populated areas, like West Texas, the results have been less dramatic.

Choices for Homeowners Facing Foreclosure

Homeowners faced with foreclosure have several options they may want to consider before giving up completely.  According to the Texas A&M Real Estate Center, homeowners have a few choices available to them before they must leave their home.   First, if a homeowner has the resources, he may end the foreclosure process by paying off the debt before the lender sells the home.  This is called equity of redemption.

Another option is for the homeowner to seek financing from another lender.  This may be a difficult task, especially since stricter lending practices are in place and the homeowner needs to have good credit to secure the loan.

The homeowner can try to sell the home and pay off the debt with the money from the sale.   There is usually little time for this, and the homeowner will have to get the home up for sale before the foreclosure process begins.

According to Texas A&M, an option that is worth trying is a DIFL (deed in lieu of foreclosure).  This occurs when the homeowner gives the property back to the lender in exchange for the cancellation of the debt.  In a tough economy, with so many foreclosures, it may be difficult to convince the bank that it should forgive debt in exchange for the home.   Short sales, where the lender agrees to sell the property at a slight loss, are a growing trend which many lenders may consider before foreclosing.

Buying a Foreclosed Home Safely

If you are not facing foreclosure, but are interested in getting a good deal by investing in one, now is a great time to look at what the market has to offer.   With loans at record lows and foreclosures at an all time high, now may be the perfect time to buy that dream home you never thought you could afford, or to purchase those investment properties you always wanted.

With that said, the foreclosure market is not one to go into lightly.  Do your research and find out as much as you can about the home/homes in which you are interested.  A good deal at first may turn into a money pit if there are lots of repairs and issues with the home.  There may be back taxes, liens, or even tenants who refuse to leave the foreclosed property.  Sometimes foreclosed homes are run-down or vandalized by prior owners, angry from being thrown out.   Good bargains can still be found, but gain as much information about the property before bidding on it.

If you don’t have time to do the research or are intimidated by the prospects of foreclosure, a safer, more reliable option exists: bank-owned foreclosures.  Foreclosed properties owned by banks are usually listed with real estate agents and don’t have all of the potential risks associated with other foreclosed properties.  The lender may be willing to offer low lending rates, lower down payments or reduced closing fees.  These properties may not fetch rock-bottom prices, but they will be a bargain in their own right and you might be able to sleep soundly once you purchase one.

Remember whether you are facing foreclosure or looking for one, there are many options to consider.

Are you looking for a home in the San Antonio area?  Start you search now.