Temple Texas Real Estate Foreclosures
What Does A Foreclosure Mean?
Foreclosure is a legal process that can be initiated when a lender wishes to recover the amount they are owed on a defaulted loan payment. Such a lender can legally take ownership of the property and sell it in an attempt to recover the owed funds. The conditions when a default is levied are covered in the mortgage agreement.
The most common condition for default is several missed monthly payments. Foreclosure is a legal matter because both the lender and the buyer agreed on the terms in the mortgage or deed of trust contract. The lender gains the right to leverage the property as collateral in case the borrower fails to fulfill the terms of the contract.
What Is A Foreclosure Property?
A property that has been legally taken over by the lender due to a mortgage agreement is said to have been foreclosed. If a home is listed as foreclosed, then it is now owned by the lender. Every mortgage contract contains a lien on the property, that gives the lender the right to own it if there’s a default on payments.
When a lender takes over a property, it is usually sold shortly. There is quite the bustling market built around foreclosed homes and there are several ways to buy these. The main reason to buy is the reduced cost. In general, a bank will list a foreclosed home for a lower price than the comparables that exist.
How Does Foreclosure Work?
There are two types of foreclosure. A judicial foreclosure needs to go through a court procedure and may be legally contested by the homeowner. Non-judicial foreclosures don’t require court procedures. The type of foreclosure and the steps necessary generally differ from state to state.
Regardless of the type of foreclosure, the process is initiated due to missed payments. If a homeowner doesn’t pay, they have violated the terms of the contract and the lender can come knocking. The foreclosure process is costly to both the parties, so the lender may want to avoid foreclosure as well.
What Are The Phases Of Foreclosure?
No matter the property or area, the first stage of any foreclosure is a missed payment. When the homeowner misses a payment, that’s a default. The Notice Of Default is sent to the owner after 90 days, and the lender usually allows homeowners to work out a new payment plan.
The lender may let homeowners undo the default, sell the property in a short sale for less than the mortgage value or sign the deed over to themselves through a deed instead of foreclosure. Signing over the deed allows the assumption of ownership without having to undergo the entire foreclosure process.
Is Foreclosure Good Or Bad?
The net effect of foreclosure depends on who you are. Fellow homeowners in nearby properties may see the value of their property drop because of the selling price of the home that is without a doubt meant to be comparable to theirs. Thus a foreclosure might be bad for a neighborhood.
Potential buyers, however, see foreclosures as opportunities. They can get houses for a low cost and resell or rent them for extra profit. That is why so many real estate websites have sprung up around foreclosed properties. A foreclosure can also help a buyer find a home in a place they would normally not be able to afford.
Is It Good To Buy A Foreclosure House?
Foreclosures can allow buyers to find a diamond in the rough. If a buyer buys a house from a short sale, the owner is looking for quick cash most of the time. They will want to cut their losses and pay as fast as possible so they don’t lose the home completely. Buyers should always remember to research a property before buying it.
Buyers buying during the pre-foreclosure phase can thus get a huge leg up on the negotiations. Even though it might seem a bit inhumane to profit off another person’s loss, a buyer can benefit from this. They can benefit even more if the property was seized by law enforcers or lenders.
How Long Does A Foreclosure Purchase Take?
Depending on the location of the property, the entire foreclosure process of a property might take as little as four months or as long as several years. When the lender forecloses, they take over ownership, then put it up for sale either at an auction or directly to the buyers.
In the best-case scenario, a home will be foreclosed, repossessed, and resold as soon as possible. In some states, a lender can sell a home 21 days after notifying the owners of the foreclosure. A lender doesn’t have to sell a home immediately though, so some homes remain in their possession.