Real Estate Foreclosures

Foreclosure in real estate is a process in which the mortgaged property becomes the absolute property of the lending institution, which can be a bank or a building society. Here, all rights of the homeowner covered by a mortgage are terminated. Foreclosure properties number is growing day by day. Foreclosure threatens these homeowners as they are seriously late on their mortgage payments. However, many of these homeowners are able to work their way out of Real estate foreclosures.

When does the foreclosure process begin?

The Foreclosure process starts when the homeowner is unable to make payments of the installments due on the mortgage at the appointed time. Terms of the loan, unemployment, divorce, medical challenges and even death can be the cause behind.

Process of Foreclosure

Generally, the payment of the debt secured by a mortgage is enforced by selling the estate. Both, the borrowers and lenders want to come out with a win-win outcome. The borrower tries his best to keep his home or business, while the lender aims for receiving mortgage payments.The letter of notice, often referred to as a Notice of Default (NOD), is issued by the lending institution to the borrower.

How to avoid Foreclosure

No home owner actually plans to go into foreclosure. Losing the home was probably the last thing from their mind, when they first bought the house.

The best way to avoid real estate foreclosure is to prevent the filing of NOD or Notice of Default. Remember, lenders also want to prevent a foreclosure but will issue a Notice of Default to protect their interests. If you know that you are unlikely to meet your mortgage installments, call your lender in the first place. It would put you in a worse situation if you start ignoring letters from your lender.

Your lender might propose different options to you, depending on your situation.

a) Extend your time to make your payments. Lenders might delay the legal action against you and allow you to work out an affordable repayment plan for you, which is also called forbearance.

b) Debt forgiveness: The lender might give you a break and forgive a payment. But it rarely happens and depends on an individual situation.

c) Change repayments plan The lender might let you extend the missed payments over a longer term. This is called a repayment plan.

d) A note modification This means changing the terms of your loan. If your mortgage is an adjustable loan, the lender might freeze the interest rate before it increases or change the interest rate to a more manageable rate for you.

e) Refinance This means that, the lender might add the back payments to your loan balance if your have sufficient equity and meet the lender's lending guidelines.

However, if you are unable to make up the missed payments due to some unavoidable circumstances and your lender is not willing to work with you, there are a few other options open for you:

Sell Your Home Talk to different real estate agents and get an opinion of market value for your home. Go for the best deal that meets your needs and time frame.

Short Sale. Negotiate with your lender to find out if the lender will cooperate on a short sale, if your home is worth less than the amount you owe. .Although a short sale affects credit but it's not as bad as a foreclosure.

Sign a Deed-in-Lieu of Foreclosure Deeding the home back to the lender, the lender is issued a properly prepared and notarized deed by the homeowner. The lender effectively cancels the foreclosure action and forgives the mortgage.

Financing Foreclosures As everyone has a unique financial situation, so look for the technique shared here that will work best for you.

Most people generally assume that one has to have money to invest in foreclosures. This is what keeps them from investing. Even people with no money or no job may capitalize on foreclosure opportunities. Remember, financing foreclosures is the easier part.

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