Foreclosure Buying 101 - Understanding The Path To Foreclosure
- Date: 2008-07-02 - Word Count: 457
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The lure of "easy money" is once more sweeping across the nation, and this time it comes in the form of foreclosure homes. Across the United States, both novice and veteran real estate investors are trying to capitalize on the abundance of foreclosed homes that are available right now.
It's easy to understand why. If you know what you're doing, you could purchase a foreclosure property for less than market value. This is good for home buyers who plan to live in the home, and it's even better for investors who buy (and resell) these homes for a living.
You can look at the situation from two sides, as being both good and bad. Sure, the record-number of foreclosed homes in the U.S. represents heartache for the homeowners themselves. But it also represents investment opportunity for buyers and investors looking for a new home. One thing is for certain -- it doesn't do the economy any good to have all those homes just sitting on the market.
If you are interested in this type of investment opportunity, the first thing you should learn is the basic path to foreclosure. Actually, this process varies a bit from one state to another. But the overall process of a home being foreclosed upon goes something like this:
1. The homeowner misses mortgage payments. This is also referred to as "defaulting" on the loan.
2. The lender will notify the homeowner of missed payments. They do this for the lender's benefit, but also to start an official paper trail that might lead to foreclosure.
3. The lender may offer programs to help the homeowner get caught up on back payments. This might include reinstatement (lump sump payment), repayment plans or forbearance.
4. If the homeowner continues missing payments, the lending institution will begin to file for foreclosure. *
5. The homeowner / borrower may try to sell the home through a real estate short sale. This is a way to sell the home quickly by pricing it low.
6. If the home is not sold via the short sale process, the lender will foreclose and make an announcement of a forthcoming sale / auction.
7. Eventually, the home will be sold to a new owner in some manner.
* Step 4 is one that varies from state to state. The process that lending institutions must go through to file for foreclosure and to actually foreclose on the home can take days, weeks or months, depending on the state laws.
This is obviously a simplified version of the process. But it covers the basic steps along the way and should therefore give you a better understanding of what takes place. Understanding this process is the first step to buying a home in foreclosure -- in a way that leads to profit.
It's easy to understand why. If you know what you're doing, you could purchase a foreclosure property for less than market value. This is good for home buyers who plan to live in the home, and it's even better for investors who buy (and resell) these homes for a living.
You can look at the situation from two sides, as being both good and bad. Sure, the record-number of foreclosed homes in the U.S. represents heartache for the homeowners themselves. But it also represents investment opportunity for buyers and investors looking for a new home. One thing is for certain -- it doesn't do the economy any good to have all those homes just sitting on the market.
If you are interested in this type of investment opportunity, the first thing you should learn is the basic path to foreclosure. Actually, this process varies a bit from one state to another. But the overall process of a home being foreclosed upon goes something like this:
1. The homeowner misses mortgage payments. This is also referred to as "defaulting" on the loan.
2. The lender will notify the homeowner of missed payments. They do this for the lender's benefit, but also to start an official paper trail that might lead to foreclosure.
3. The lender may offer programs to help the homeowner get caught up on back payments. This might include reinstatement (lump sump payment), repayment plans or forbearance.
4. If the homeowner continues missing payments, the lending institution will begin to file for foreclosure. *
5. The homeowner / borrower may try to sell the home through a real estate short sale. This is a way to sell the home quickly by pricing it low.
6. If the home is not sold via the short sale process, the lender will foreclose and make an announcement of a forthcoming sale / auction.
7. Eventually, the home will be sold to a new owner in some manner.
* Step 4 is one that varies from state to state. The process that lending institutions must go through to file for foreclosure and to actually foreclose on the home can take days, weeks or months, depending on the state laws.
This is obviously a simplified version of the process. But it covers the basic steps along the way and should therefore give you a better understanding of what takes place. Understanding this process is the first step to buying a home in foreclosure -- in a way that leads to profit.
Related Tags: short sale, foreclosure homes, foreclosed
Brandon Cornett is the publisher of Foreclosure City, a website that offers tools and information related to foreclosed home buying, real estate short sales and similar topics. Learn more by visiting www.homebuyinginstitute.com/foreclosures Your Article Search Directory : Find in Articles
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