There are many misconceptions about what foreclosure is, why it happens, and what it means when a foreclosed home is for sale. To help dispel any myths or anxieties you may have about buying a home that may lead to foreclosure, you are facing foreclosure, or you are looking at purchasing a foreclosed home, we would like to take a minute to discuss what a foreclosure is and what it means for you.
What Is A Foreclosure?
Simply put, a foreclosure is a home that a bank owns. When you purchase a home, whatever lender approves you to have a mortgage through them takes a gamble on you and your ability to pay your mortgage as agreed upon until it is paid off in full. Unlike a credit card or your car, however, the bank or mortgage financer does not own your home. When you default on your mortgage, this initiates the foreclosure process. The homeowner may abandon the property and the bank seizes it, or the homeowner can voluntarily deed the home to the bank. In either event, now the bank owns the property. It is important to understand that this process does not happen overnight and is not the result of a single late or missed payment; rather, foreclosure is a process.
What Foreclosure Means For You
Foreclosure is a process that results from the non-payment of a mortgage. This process and the consequences and benefits vary, depending on which party you are in the foreclosure process. The foreclosure process varies from state to state and circumstance to circumstance. For instance, some states allow the homeowner nearly a year to correct the default while living on the property, while others allow the lender to resale within four months. In the event of illegal activity, houses may be seized quicker with less of an opportunity for the homeowner to cure the default. It is important to consult with a real estate lawyer when foreclosure is involved in the buying or selling process.
As The Potential/New Homeowner:
Many people fear the potential of foreclosure on a home so much so that they opt not to buy a home. When you understand what a foreclosure is, it should help reduce these fears, as they are not as common to honest, hard-working people as it may seem. There are many reasons and life circumstances that cause homeowners to default on their mortgage, such as being laid off, divorce, or overwhelming debt. If you are responsible with your money, there are ways to avoid or reduce the impact of all of these scenarios. It is not common that mortgage financiers allow potential homeowners to qualify for mortgages that are far beyond their means.
As Someone Facing Foreclosure:
Before your home is foreclosed on, it is important to remember a few things. Most importantly, the bank is seizing the property based on an unpaid loan; they are not taking your home from you. Houses are foreclosed, families are not. Secondly, it is important to be honest with your lender. If you face an unforeseen circumstance — the death of breadwinner, divorce, or the loss of a job — communicate that with your lender. Most mortgage financiers can accommodate such life changes by offering help making arrangements or negotiations on payments, postponing due dates, and even skipping payments. While this will not change the amount you owe, it can provide relief long enough for you to get back on your feet without losing your home.
As Someone Purchasing A Foreclosure:
As someone who is interested in buying a foreclosed home, you may find that the selling price is unbeatable. It is common for the lender to sell the home to recoup the money that was lent, not to make a profit. In some cases, the house is in great condition and the homeowner fell victim to unfortunate circumstance. However, during the housing crisis, some homeowners saw foreclosure as a way out from under a home that needed more repairs than it was worth. It is important to still make sure that all the inspections are done and that the home is worth the asking price!
If you are a homeowner who is facing potential foreclosure, don’t let your home be seized. Trust an experienced real estate agent to sell your home fast and avoid the damage to your credit and future. If you are looking to buy a home, let a trusted real estate agent help you make sure you are getting your money’s worth — foreclosure or not! For an experienced realtor in Zionsville, call Jones Realty Group today! Let us help you buy or sell your home today!