Foreclosure home refers to a property for which the homeowners fails to pay the mortgage.
Specifically, it is a legal process by which the owner forfeits all rights to the property. If the owner cannot pay off the outstanding demand or sell the property via short sale, the property goes to a foreclosure auction. If the property doesn’t sell there, the lending institution takes the position of the same.
In case of a foreclosure, a lender seizes in case of the monthly payment failure and sells it to a new buyer to recover the mortgage balance.
Irrespective of the process and timeliness of the state, the result of a foreclosure is the same: the mortgage borrower loses his or her home. Investors or consumers can purchase these home at the auctions or directly from the bank or government agency.
Reasons for Foreclosures Occurrence
The basic reason behind foreclosures is that the homeowner has failed to make the agreed upon payments with their mortgage lender. The reasons behind nonpayment can be many: –
- Job or income loss
- Medical bills
- Credit card debt that is impossible to stay afloat
- Bankruptcy
- Divorce
- Financial or personal issues
- Laid off or fired off or quitting the job
- Maintenance issues those are no longer affordable
- Squabbles with co-owner
- Job transfer to another state
Why Foreclosure Properties Are Money-Savior?
Buying a foreclosed property is a great way to save money although not all the bank or foreclosed properties are a good bargain. Many are priced lower that market value owning to their condition or lenders need to reimburse their financial losses as a soon possible.
In this way, buying a foreclosed property enables buying a home that may be otherwise unaffordable, in a prominent area or with additional covered floor are/square footage your budget could have afforded.
But the side effect is that foreclosed property often comes in poor condition, requires maintenance and repair. The seller typically is not willing to make repairs of the property.
Stages of Foreclosure
The process of foreclosure is different in a different state. In some places, foreclosure advance through a judicial proceeding before the house can be seized. In some states, there are non-judicial options available.
For the legal foreclosure process to initiate, the borrower should be at least 120 days lagging on their monthly mortgage payment.
Negotiating Which Sellers
Additionally, banks look for the recouping their losses to the maximum possible extent. So, they usually present a counter offer during negotiation. This again requires approval by several people.
For the best outcome, while negotiating, it is always advisable to engage a real estates agent preferably the one with foreclosure experience. She can help craft a competitive offer based on comparable sales and market conditions.
