What are Foreclosures?
When homeowners fall behind on mortgage payments, a foreclosure may occur. A foreclosure is a process in which a financial institution repossesses or sells a piece of property because of a loan default. Mortgage lenders usually consider a mortgage to be in default when payments haven’t been made in three months. When a mortgage loan is in default, the mortgage lender can start the foreclosure proceedings of the property. There are three ways to get a great deal on buying foreclosures: Pre-Foreclosure [NOD, LIS] : Information is everything! Up to date accurate information is essential for investing in foreclosures. You will need a source for knowing what properties are going to sale, for how much and when. Buying homes in pre-foreclosure is about timing and reaching the homeowners early on to help them. Many of these homeowners don’t know who to turn to, they are mostly scared and/or worried. Wouldn’t anyone be fretful in the same situation? When a homeowner is unable to pay one or two
When a loan or mortgage on a property has become past due, a foreclosure is the means by which a bank or other lender can reclaim the property from the borrower. Normally when a person borrows money to purchase physical property like a house, car or boat, the person agrees with the lender to make timely payments of a specified amount on a certain schedule. Depending upon state law, lenders can initiate foreclosures after one or more missed payments. There are several ways in which foreclosures can be initiated. A bank can notify the borrower that his loan is in default and the property will be seized by a certain date. This gives the borrower a chance to make up the payments, or to sell the property in order to cash out any equity. In other cases, the lender may merely seize the property, called a deed in lieu of foreclosure. By reclaiming the property, the lender then has the right to sell the property, often at a reduced price. The lender’s attempt is to get back the money still owed
Foreclosures occur when a homeowner fails to make payments on the house and the bank takes legal ownership of the property. This can turn into a great opportunity for bargain house hunters as many foreclosures are sold for far less than if the house was on the open market. The complexities of working with pre-foreclosures (NOD, LIS), Auction (NTS, NFS) and bank owned properties (REO), can be challenging and consumers and REALTORS® alike should take the time to understand the process.
Foreclosures are properties that have been obtained by the lender because the current owner has stopped making their loan payments. There are three stages to the foreclosure process. At each stage, the property is considered a distinct type (default, auction or banked owned) and presents a unique opportunity for a new purchaser.
