Everything You Need to Know About Foreclosures - The Basics Explained
For most homeowners, foreclosure is a terrifying word that conjures up images of destroyed credit, financial ruin, and uncertainty. Some are facing foreclosure now, confused and unsure about just what it will entail. But beyond these frightening thoughts, the truth is that many people don't really understand all of the facts about foreclosure. Whether you're in danger of facing immediate foreclosure, considering it as an option to get out from under a massive mortgage, or simple want to know more about what it is, here are some of the basic facts concerning foreclosure and what it means to a homeowner.
Essentially, foreclosure is the process of a lien holder obtaining an order to terminate a mortgagor's right of redemption. When a borrower defaults on payments owed to a lender, the lender usually attempts to repossess the property. Several legal maneuvers can give the borrower the right to redeem themselves by repaying the debt and reclaim the property. The act of foreclosure removes the chance of the borrower gaining this 'equitable right of redemption'. When the process is complete, the lender can sell the property and retain all the proceeds to pay off the mortgage and legal costs owed.
Several types of foreclosure exist. Foreclosure by judicial sale requires the mortgaged property to be sold under supervision of a court, which ensures that the proceeds are dispersed properly. Foreclosure by power of sale is used when a power of sale clause present in the mortgage or when a deed of trust is used. In California, practically all mortgages are in reality deeds of trust. In a foreclosure by power of sale, the mortgage holder can sale the property without supervision by a court. This type of foreclosure sale usually happens much more quickly than foreclosure by judicial sale. These are the two main types of foreclosure that occur in the real estate market.
Some states offer 'redemption periods', periods of time in which the defaulting homeowner may raise the money to buy back the home for the auction price. California, for instance, has a redemption period of one year. When the period is up, if the money to purchase back the home has not been raised, the homeowner loses all rights to the property. Foreclosures have a negative bearing on your credit rating, and in most cases you will be ineligible for a loan until seven years have passed, after which you may still have difficulty securing a loan. Numerous options exist to help avoid foreclosure, and some research may help lead a struggling homeowner to assistance.
About the Author:
As Realtor Consultants, Don and his team give their clients all the information they need to make Good Real Estate Decisions. Visit us today and find out why more people choose http://www.siliconvalleyrealestateteam.com/.
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