Unfortunately, when the majority of people choose to buy a foreclosure property, they are not aware of the whole process, or how it all works. When searching for the best deal on a foreclosure home, the key to success is, knowing each and every step of the foreclosure process. The goal is targeting the best value properties and getting through the whole procedure as quick and easy as possible.
The majority of foreclosure homes are on the markety because of bad debts. In these cases the home owner took out a secured debt, such as a mortgage loan from a lender, using the home or property as collateral. The foreclosure is the process the lender will use to get the home back, when the owner becomes unable to pay back the debt. At this time, the lender will attempt to recover the balance due by selling the owner’s property. The whole process of the foreclosure starts when the lender files a Notice of Default or Lis Pendens.
The debtor will only have the right to keep the property and retain ownership, if they can manage to pay off the arrears within the amount of time given after the Notice of Default. This is the so called pre-foreclosure stage. In order to keep their credit score and report intact the debtor can sell the property to repay the home loan during the pre-foreclosure period. They are also able to negotiate a mortgage modification with their lender.
Unfortunately the majority of these cases end up with the selling of the property at a public foreclosure auction or sheriff’s sale, because the homeowners do not act quickly enough or sell their property in time to pay off the mortgage.
For those who are searching for a house, the pre-foreclosure period is the best point in time to purchase. By purchasing at this time, it will help the homeowner save their credit from the foreclosure, so they will be offering to sell at a larger discount. Homes in the pre-foreclosure stages are available well below market values and can even be purchased using a short sale. This is when a home is sold for less than the payoff on the home.
The second most popular stage of the foreclosure process is to buy the home at the foreclosure auctions. The lenders often sell these homes below the market value, because they are only trying to collect the remaining amount of the debt; often homes are sold below the true market value. There are many recorded cases when homes are sold for 50% less than their appraised value. So when searching for a foreclosure home, we always recommend gathering as much information as possible, to help make sure you can find the perfect hime at the best possible proce.
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