Knowledge base
Learn how to buy any kind of home, distressed or not
Pick the path that matches the property you're after. Each one is a roadmap from first search to closing, with guides, the terms you'll meet and calculators for the numbers.
Choose your path
Path 1Home BuyingAbout 40 min to learnYour first or next home, start to finish.Path 2Pre-ForeclosuresAbout 40 min to learnBuy from an owner before the auction.Path 3Foreclosure AuctionsAbout 40 min to learnResearch, bid and win at the sale.Path 4Bank-Owned (REO)About 40 min to learnBuy a home the lender took back.Path 5Financing & ClosingAbout 45 min to learnLoans, title checks and closing day.
How a foreclosure unfolds
Every distressed property sits somewhere on this timeline. Where it sits decides how you buy it, what you can inspect and how you pay.
- 1Missed paymentsThe owner falls behind; the servicer sends notices and may offer workout options.
- 2Pre-foreclosureA notice of default or lis pendens is filed. The owner can still sell, catch up or negotiate.
- 3AuctionThe property goes to a public sale, usually for cash, as-is and often without an inspection.
- 4Bank-owned (REO)If no one outbids the lender, it takes the property back, clears most title issues and lists it.
- 5ResaleA buyer or investor purchases, repairs and occupies, rents or resells the home.
Real estate terms glossary
55 terms you'll encounter buying a home, a foreclosure or an investment property. Start with the ones people look up most.
MortgageMortgages & financingA mortgage is a loan used to buy real estate, secured by the property itself. If the borrower stops paying, the lender can take the property through foreclosure to recover what is owed.EscrowBuying & closingEscrow is an arrangement where a neutral third party holds money or documents until the conditions of a deal are met. The term also refers to the account a lender uses to pay a borrower's property taxes and insurance.Closing CostsBuying & closingClosing costs are the fees and prepaid expenses paid to complete a real estate purchase, beyond the price and down payment. Buyers typically pay about 2% to 5% of the loan or purchase price.Down PaymentMortgages & financingA down payment is the part of a home's purchase price the buyer pays upfront in cash rather than borrowing. It is usually stated as a percentage of the price and is due at closing.Home EquityMortgages & financingHome equity is the portion of a property you own outright: its current market value minus everything owed on it. It grows as you pay down the loan and as the home's value rises.Private Mortgage Insurance (PMI)Mortgages & financingPrivate mortgage insurance (PMI) protects the lender, not the borrower, if a borrower defaults on a conventional loan. It is usually required when the down payment is less than 20% of the home's value.Short SaleForeclosure processA short sale is the sale of a home for less than the amount owed on its mortgage, with the lender's approval. The lender agrees to accept the reduced proceeds to avoid a foreclosure.RefinanceMortgages & financingTo refinance is to replace an existing mortgage with a new one, usually to get a lower rate, change the loan term, or take cash out of the home's equity.
Real estate calculators
Mortgage CalculatorMonthly payment with taxes, insurance, PMI and an amortization schedule.Home Affordability CalculatorThe price range your income and debts support under the 28/36 rule.Foreclosure Auction Bid CalculatorYour walk-away bid for a foreclosure auction.Fix and Flip CalculatorProfit, ROI and a 70% rule check on a flip.
Disclaimer: The information on this page is for general educational purposes only and is not legal, financial, tax or investment advice. Laws, lending rules and market conditions vary by state and change over time, and any figures shown are estimates. Before you buy, sell, finance or bid on a property, consult a qualified attorney, financial advisor, lender or licensed real estate professional about your situation.