What is a foreclosure?
Properties that have been acquired by mortgage lenders because the owners have defaulted on the loan payments. The lender takes the property when the payments are behind. Lenders must follow the state laws where the property is located.
Homeowners stop making their loan payments. Lenders try to work out some kind of resolution with the owners to make up the payments in a process called "loss mitigation." This period is referred to as "pre-foreclosure."
If efforts to work out a payment plan are not successful, the lender will generally start foreclosure procedures after three months of non-payment.
Another party may offer to solve the problem by buying the property from the owner during pre-foreclosure, or from the lender at time of the public foreclosure sale, or afterwards. This presents an opportunity for prospective home owners looking for bargains.
Foreclosure properties represent an exciting way to buy real estate because they can be purchased at discount prices. These discount prices are possible because the sellers, which can be the borrowers, the mortgage lender, or one of several government agencies, are motivated to sell as quickly as possible to avoid further losses. As an owner-occupant buyer, you can purchase a foreclosure as your residence and enjoy instant equity.
