Home Foreclosure Accompanied By Deals And Frustration
For most people owning their own home is considered part of living the American dream, but when some unforeseen circumstance arises, home foreclosure can turn that dream into a nightmare. However, there have been some home mortgages granted that were based on erroneous financial information from either the buyer or the lender and the potential for home foreclosure was high from the start. Either way, there are some folks who turn someone else's misfortune into an opportunity by buying homes that others have lost.
If the home can be purchased before going through the home foreclosure process, the homeowner may actually be saved from other financial problems, as getting out from under a debt they cannot afford to pay will give them the money for other necessities. Unfortunately, most people looking to buy properties threatened by home foreclosure are looking to buy them at drastically discounted prices. While the common thought may be buying homes for a fraction of their value, in most instances the reality is they will sell for about two-thirds of their valuated price.
Many people enter into an agreement with a lender with all intentions of eventually owning the property on which they have a new mortgage, but the loss of a job or other circumstances can quickly find them dealing with home foreclosure if they are unable to meet the monthly payments. The type of loan agreement can also cause them to lose their home.
Caution Urged When Entering Loan Agreement
Many home loans have an interest rate that is tied to the national prime rate, called adjustable rate mortgages and during the initial part of the agreement, the payments may be acceptable to the buyer. However, if the prime rate goes up, so do the monthly payments, leaving some buyers looking at home foreclosure due to higher monthly payments.
One of the ways to stop home foreclosure is to seek a fixed-rate loan that will cover the cost of the mortgage with affordable monthly payments. With this type of loan, the payments will remain steady during the life of the loan, but switching too late could still find the property going through home foreclosure unless any past due payments are made. This will also help the buyer obtain better rates on any new loans to replace their old mortgage.
However, many times when a person is threatened by home foreclosure, they are already behind in their payments, which affects their credit rating and the ability to take out another loan with more favorable rate. This is something that can be done before home foreclosure proceeding begins with more favorable results.