Foreclosures are lucrative properties for buyers who would wish to purchase a home on a bargain. Well, at least that is the assumption of many homebuyers. It is the dream of any homebuyer to purchase their ideal home at a low price and a foreclosure presents one of the best opportunities to make this a reality. You may keep an eye out for sunset west condominiums that may be up for foreclosure in order to bag your dream home. Before you jump on the foreclosure bandwagon, you need to understand what it is and how you can exploit this opportunity.
Foreclosure is a legal process through which a homeowner forfeits all rights to the property due to breaching the mortgage contract. A homeowner who buys a home through mortgage often puts up a cash down payment that covers about 3.5% – 20% of the total price of the home. The rest of the cost is covered by the loan amount received from the lender, which is the mortgage. The homeowner is required to make specified monthly payments in order to repay the loan within a number of years.
When a homeowner defaults on making monthly payments to repay the mortgage, the lender will take the property back from the owner and sell it off in order to repay the remaining part of the mortgage. Homeowners default loan payments due to various reasons including:
- Lack of money due to the loss of a job or inability to work
- Underwater property where the value of the home is lower than the mortgage amount
- Inability to maintain the property
- Job transfer to another state or country
If you are experiencing financial troubles but you still wish o keep the house, you may approach the lender and formulate an arrangement that gives you time to get back on your feet so that you can continue making monthly payments.
Lender’s public notice
After about 3-6 months of loan default, the lender records a public notice with the County Records Office. The notice indicates that the borrower (homeowner) has defaulted mortgage repayment hence the house is up for foreclosure. The lender is often required to issue the same notice to the homeowner to warn them of the impending danger of losing their home.
The lender puts the home under pre-foreclosure, which is a grace period of about 30-120 days stipulated by local laws. The grace period gives the borrower time to either pay the outstanding mortgage amount or work out an arrangement with the lender to sell the home via a short sale. If both options do not go through, the lender puts the home on foreclosure.
The lender first attempts to sell the home at a foreclosure auction. The lender often seeks to raise the outstanding mortgage amount from the sale of the home hence such homes often come with a low price tag. The home is sold to the highest bidder at the auction and the winner is required to settle the sale in cash. Notably, participants of the auction do not get the chance to scrutinize the house hence you end up buying the home with crossed fingers hoping that it is good condition.
If the home does not sell at the auction, the lender takes ownership of the property and it now becomes a bank-owned property. Bank-owned properties are either sold at liquidation auctions or listed for sale through real estate agents. We present various foreclosed listings to buyers including Seattle live work lofts for sale.
The process of buying a bank-owned property often takes long hence a potential buyer should exercise maximum patience throughout the process.