Mortgage matters
Is it more difficult to borrow money for a mortgage today than it was just three years ago when pretty much anyone with a last name was approved for financing? Yes -- and it should be to avoid the kind of foreclosure crisis we're facing right now. Is it impossible? No -- or at least it isn't for qualified buyers who do their homework first.

Even for those who qualify in today's market, most lenders are now requiring larger down payments and higher credit scores for foreclosure purchases.

Many of the best foreclosure deals are purchased entirely with cash, since that is often the cleanest, quickest and easiest offer for the seller to accept.

Pre-qualified versus pre-approved:

Know the difference
Providing a pre-approval letter from a lender will make your foreclosure offer stronger, since it is based on actual figures for your income, assets and liabilities in determining how much you can comfortable afford. Pre-approval, on the other hand, is more of an estimate based on a cursory look and typically does not hold as much weight.

In your best interest
- At the time of writing, interest rates were around five percent, with some believing they could be headed for historic lows below four percent.
- Depending on the terms of your mortgage, your interest rate will be fixed for the entire length (usually 15 or 30 years), or variable, meaning it can adjust periodically in either direction.
- It is frequently possible to "buy down" the interest rate by paying points (one point is equal to one percent of the loan amount). - Interest rates can be "locked in," meaning the lender guarantees a given interest rate for a limited number of days (typically 30, 45 or 60). Borrowers usually opt to lock in a rate when they're confident they won't go much lower.
- Conversely, "floating" a rate allows buyers to lock in at some future time during the mortgage process -- with the risk that rates may actually be higher when a decision finally has to be made.

Who has the money?
Here are just a few of the places where homebuyers and investor can turn when trying to locate funds to purchase a foreclosure:

- Banks and savings institutions
- Mortgage brokers
- Personal investment funds
- Home equity lines of credit
- Credit cards
- Private investors