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:
Foreclosures
:
What
is Foreclosure?
by
Sal Vannutini
Many
of us have heard the term foreclosure in relation to other
individuals and understand that it is not a pleasant term,
but do not have a firm grasp on what it actually means. Before
we go any further in discussing the profit potential available
through foreclosures it is critical that we define the term
foreclosure.
Almost 100% of the population, minus the small segment that
has ready cash lying around, must finance a significant portion
of their home purchases. Most people cannot afford to simply
pay the actual cost of their new home up front. The actual
percentage varies from one individual to the next; but it
is common for prospective homeowners to finance anywhere between
80% -100% of the home purchase. The amount of that loan is
paid back over a period of time through a tool known as a
mortgage. We're probably all familiar with that term on a
monthly basis ourselves.
The part that really interests us is what happens next. In
some situations, the homeowner at some point in time will
not be able to meet the monthly mortgage note. This, of course,
could occur for a number of reasons. Bad financial decisions.
Loss of employment. Medical conditions. Whatever the reason,
after a certain number of late or missed payments the lender
will have no choice but to call the loan. Continuing with
this pattern of behavior would be a bad financial decision
for the bank and their stakeholders.
In almost all cases, the lender will provide an opportunity
for the homeowner to bring their payments up to date in an
effort to avoid foreclosure. In most cases, the homeowners
are not able to do this because they have become so mired
down in financial problems. At this point the bank begins
to take action to actually take back the house. This is known
as foreclosure and it is possible because the property was
listed as collateral when the loan was originated. While the
word foreclosure leaves a bad taste in the mouths of some
people, it is actually no more and no less than a business
term. The bank agreed to lend the homeowner money for the
purchase and in exchange the homeowner agreed to pay interest
on the money with the stipulation that in the event they could
no longer meet the notes on the loan; the property would be
returned to the bank.
Also
read:
• Bank
Foreclosures Profitable Investment
Several people, especially those new to real estate investing,
will prefer bank foreclosure to any other form of property
buying because they think that they are safe to buy. Their
understanding is that the bank owns the property and therefore
they are free from all liabilities and other negative
encumbrances. Though a bank forclosure can be safe, the
bank never owns the property. The property has only been
pledged as collateral, meaning in the event of default
of loan payment, the property should be disposed to redeem
the loan.
• Florida foreclosures |
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About
the Author
Sal Vannutini is the creator of the software program Foreclosure
Wizard. The program provides a unique step-by-step process
that will help you quickly and easily determine which deals
have profit potential and which ones are a waste of your time.
Click here now: http://www.foreclosurewizard.com
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Also
read:
• Bankruptcy
• Foreclosure defined
• Florida foreclosure statutes
• More
home for the buck - Buy a foreclosure and save big
There's not many things more discouraging than calling
a real estate agent, giving them your financial information
and filling them in on what type of home you'd like to
buy for the price range you are comfortable with, then
seeing the look on their face and explaining to you what
you can really afford. While most people give in and settle
for much less, many others find a market that will allow
them to purchase homes below or well below what the market
dictates. |
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