We’ve all heard of the word in our daily lives, but many people may be unsure about the real meaning of foreclosure. Home purchases are serious business, and when a person goes into this process unprepared, or simply gets in over their heads, foreclosure is the unfortunate result. Typically, most potential homeowners aren’t able to pay up-front for their home. This leads most of us to periodic mortgage payments, instead.
As a result of various deterrents (including a loss of employment or injury), an individual may be unable to continue payments. Normally, the lender will allow a brief amount of time for the individual to “get their act together,” but most of the time it’s not enough, considering the homeowner was in a bind to begin with. All roads point to foreclosure.
Home payments are often difficult to maintain, and when foreclosure occurs, it’s certainly not a laughing matter. However, it’s important not to view the lender as an “enemy” or the “bad guy” out to get the common folk. When the bank and the homeowner agree to a loan, it is a legal binding contract, which both parties must uphold. This includes the stipulation of property being handed to the bank when the loan can no longer be repaid.
Before the bank can take back property during foreclosure, home area auctions are normally held. However, there is a period of time between the two, known as “pre-foreclosure,” and it’s the ideal time for you, the investor, to strike gold. Pre-foreclosure is easy to spot- published information is required from the bank in preparation for the previously-mentioned public auction.
If you keep your “eye on the prize” and do your research, you can spot pre-foreclosures quite often. When you find one, your first order of business should be in convincing the homeowner to sell to you. This will speed up the process for the homeowner, and more importantly, you’ll be more likely to find a good deal in this one-on-one setting; you won’t have to compete with other bidders, and you have more time to get your finances in order.
Occasionally, the bank will actually purchase back the home at the auction. Now, even though “the bank” isn’t some monstrous ogre you should avoid, I feel confident that most of us would rather do business with someone more on “our level.” This is convenient; it’s usually more of a hassle dealing with the bank during post-auction negotiations. You see, banks aren’t exactly thrilled with having their names attached to records of foreclosure- it’s simply not good for publicity. “Foreclosure home” is definitely not an inviting term to be associated with. Also, the bank incurs various fees for every day they hold the property, so you may end up paying more in the long-run.
Since you’re now more comfortable with the term, and know about its potential for financial success, you should keep your eyes peeled for foreclosure. Home may be where the heart is, but investing your time and efforts into finding a “foreclosure home” sure puts in a good word for your brain, as well..
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