People often ask the question, “What is a foreclosure?” A process in which a homeowner or the loan borrower is deprived of his property rights because he has failed to repay the mortgage on time is known as foreclosure. If the owner is unable to pay the outstanding debt or cannot even sell his house through short sale, the property automatically goes to the bank or the financing institute.
Some of the most important keywords which are used in this context are:
Buying a house is seen as one of the largest investment that a person do in his lifetime and people are also not equipped with the assets that can help them to make a purchase. Therefore they choose to get it financed from a bank or lending institute. They can get their house financed by keeping it as a guarantee that the loan will be repaid.
- Mortgage holder
An individual who owns the home loan which was extended to the buyer and he has the rights to collect the loan payment. Moreover, in case of default payments, they are even entitled to foreclose.
He is the person who has made the purchase and is responsible to repay the loan.
- Property ownership
Until or unless the loan is repaid, ownership of the property remains with the lending institute. Only after making the full payment, the ownership is transferred to the name of the borrower.
- Defaulter on loan
When the loan is sanctioned, both parties agree on the terms and conditions of the home loan. However if the borrower failed to repay the money on time, he is said to be a defaulter and the financing institute has the right to begin with the foreclosure proceedings.
It is important on the part of the borrower to know different ways through which foreclosure can be avoided before signing the deal. House loan with a fixed interest should be preferred over its counterpart to avoid surprises. Never invest in a property which is expensive than what you can really afford. Most importantly, understand what your commitments are before signing any deal.
The answer to the commonly asked question “is it really possible to avoid foreclosure?” depends a lot on the region in which a person’s live and also on the lender. Some lenders work in the best interest of their borrowers and would help them to make new agreement while others who do not wish to work for their client, would not help the borrowers.
However there are some additional options to avoid foreclosure such as short sales help a person to sell his home at a price lower than the market rate. In this the homeowner is able to sell the house but without any profit and can repay the loan. Another way is redemption which allows the owner to pay up all the back payments and keep the house.
In order to avoid foreclosure, it is essential to pay all the payments on time without becoming a defaulter. So remember to buy a house that fit your budget so that you can live happily in your new house.
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