Understanding Foreclosure and what it means to you
We never thought it would happen. I never dreamed that someday we would have the forms in front of us stating that we were not only in the foreclosure process but also are about ready to lose our home. For most people foreclosure is a scary word that we all wish and try to avoid. The truth is, most Americans don’t fully understand how the foreclosure process works and what exactly the process entails. Understanding the steps of foreclosure is key in owning a home so that in the event you are faced with hardship; you are educated and aware of what will happen next.
Luckily forecloses have dropped 26 percent since the market crash surrounding 2012, however, that doesn’t mean they don’t still exist. In 2013 there were nearly 1.4 million Americans alone who had to foreclose their homes or were served with the beginning default notices.
When a foreclosure starts, it is due to the homeowners being unable to pay their agreed mortgage statement including both principal and interest balances. When these payments are missed the bank will begin their attempts to repossess the home. Your home won’t be taken immediately, the first thing that will happen is you will be served with a Notice of Default (NOD) and that is your turning point. Once you have received these papers you have two different options: first, you can pay the amount you owe on the loan to bring your loan back to good standing or, second, you can face the foreclosure.
While many people believe a foreclosure happens right away and you have no time to prepare yourself, this is extremely rare. Generally speaking, within three months of being served your Notice of Default you will then receive a Notice of Sale (NOS). This statement simply means that your home has officially been foreclosed and there is a date set for your home to be sold at auction. If you are on the opposite end of things keep in mind buying a home at auction isn’t a simple task as there are many different fees that are associated with your purchase. Another huge thing to consider when purchasing a foreclosed home is that you are unable to inspect or tour the property at all so you are jumping in sight unseen. If your home doesn’t sell at auction, unfortunately, you don’t get it back, while we would like to believe things worked out that well, it isn’t the case. If the auction fails your property will become bank-owned or real estate owned.
All in all, the main thing you need to focus on when faced with a foreclosure is that you do have time. You aren’t going to lose your home overnight so take a few deep breaths to plan out your next move. While we never plan on our home foreclosing it is a common procedure among Americans and something you will be able to recover from. While your credit will be hit, you will also be able to rebuild that over time and can seek help and advice from professionals who can walk you through all the steps. To find out more regarding the foreclosure process and what options are available to you, click here!