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What Is Foreclosure?
By Vic Hurlstorm | April 30, 2009
If you own your own home or are looking to buy one in the future, it is crucial that you educate yourself on foreclosure. This is a process that you really need to be educated on, and which can also help you save some money as well.
Foreclosure is defined as being the legal proceeding in which a mortgagee obtains a court ordered termination of a mortgagor’s equitable right of redemption. Foreclosure is on the rise and affects not only the homeowners, but the surrounding community as well so it is important that everyone understand foreclosure.
This is a worldwide issue rapidly becoming an epidemic in most places. Just in the United States, at least 4% of all homes are in foreclosure, and many more will fall into foreclosure in the near future.
Why It Occurs
There are tons of obstacles that could prevent a homeowner from making their required mortgage payments, and this is when foreclosure starts. All it takes for a homeowner to fall behind on mortgage payments is the loss of a job, though many of the current situations are caused by adjustable rate loans which suddenly increase the monthly payments, sometimes doubling the previous amount paid.
Homes rapidly being added to the foreclosure listing is a sad thing, but for buyers in the real estate market they could mean big savings. Many people who are in the market for a new home will often look specifically for foreclosed homes, because they know that they will be getting the best value, and it is not as though there is anything wrong with the home.
Beautiful homes are left sitting after foreclosure, not because there is anything wrong with them, but because the previous owners could no longer pay to live in them. Since the bank or mortgage lender will of course want to get back some of the money owed on the foreclosure listed home, buyers who don’t necessarily have a lot of cash or are just bargain hunters can often get great deals on these homes.
The foreclosure process usually officially starts with the lender sending a letter demanding payment to the homeowner. The first notice will usually be issued when the loan is two months behind, though that varies by state.
If you want to buy a foreclosed home, just make sure that you mention this to your real estate agent when they are helping you look for a home, so that you will be able to come out with the best possible results and find the home of your dreams, at a price that you can afford.
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