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Being a homeowner up against the possibility of foreclosure can feel very scary. If you don’t understand the foreclosure process, it can seem even more daunting.
With 1 out of every 200 homes going through foreclosure, you’re not alone in this experience. Continue reading this article to learn more about going through foreclosure and what you can do to make the experience as painless as possible.
Going Through the Foreclosure Process
Knowing what its like to go through a foreclosure doesn’t allow you to keep your home but it does ease some of the stress you’re feeling.
What is Foreclosure?
Foreclosure is when the homeowner fails to repay their loan and the lender takes the house. If homeowners fail to pay HOA fees or property taxes, they may also experience foreclosure.
When a home is going through foreclosure, the lender may seize the home and sell it so they can get their money back from the loan.
Under the lien on a home is removed due to payment in full, there is a possibility of falling into foreclosure.
How Does Foreclosure Work?
With a foreclosure, you don’t always have to go to court.
If you have to go to court over the foreclosure, you have to sign off on it as the homeowner. In some cases, you won’t have to go to court and you don’t have to agree to the foreclosure.
Going through the Process
Missed payments are always the start of the foreclosure process. The bank doesn’t care why you’re not paying — it just cares that you’re not paying. You’re under contract with them and your home is collateral.
The good news is that the foreclosure process is expensive and bothersome to the lender. If they can avoid going through the process, they will do what they can to work with you.
Homeowners can often negotiate for lower or delayed payments so don’t be afraid to speak to your lender and see how they’re able to help you.
If the homeowner doesn’t start making payments (usually 3 to 6 months of payments) or work out a deal with the bank the next step that comes is public notice. Once the Notice of Default goes to the homeowner, the home moves into pre-foreclosure.
When the homeowner doesn’t want to go through foreclosure they can choose to quickly pay down the default amount of they may wish to sell their home in a short sale.
The next stage of the foreclosure is the auction of the home and if the home is purchased at the auction, the home is now in post-foreclosure. When the home doesn’t sell at the auction, the home now becomes bank property.
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