The home foreclosure process is not a complicated one if you know the basic terminologies. However, because of lack of proper knowledge there are many myths in people about the thing. In this article, I shall put forth the most common home foreclosure facts and myths to clear all your doubts.
Foreclosure is a process which is initiated when the person having mortgage fails to make timely mortgage payments to the lender. Loss of property is certainly a big setback for the home owner. However, there are many misconceptions regarding the process of home foreclosure and this leads to people taking wrong decisions and affecting their financial position. After reading the facts and myths about home foreclosure given below, you will understand exactly how it works.
Facts and Myths about Home Foreclosure
Foreclosure of a home is something which every homeowner would want to avoid. No one wants to lose their home to the mortgage providers as it is their most prized possession. However, for this, making timely mortgage payments is essential and if this is not possible, one must be aware of the ways to deal with this situation. If help is sought at the right time, it is possible to avoid loss of asset and maintain your credit scores at the higher levels.
| Myths and Facts About Home Foreclosure | |
| Myths | Facts |
| I will not be able to buy a home again if my home is foreclosed. | Though it is difficult to get out of the problems caused by foreclosure, it is not impossible. You should start by rebuilding your credit and creating a saving and expenditure plan for yourself. Some help from credit counseling companies can help you get a mortgage again. |
| I will lose the possession of my house if I default on my monthly mortgage payments. | If you are facing financial problems to make monthly payments, you should immediately contact an HUD-approved housing counselor who will guide you about a suitable repayment plan, loan modification and reinstatement. |
| I should immediately go for the foreclosure if my lender does not respond to my requests for meetings. | Like you, your lender has many people to attend to and hence you need to have patience to get an appointment. Completing the loan modification process is definitely a bit time-consuming. |
| I am being offered help by many people to avoid foreclosure, but most of them seem to take advantage of my weak financial position. | Though there are people who try to exploit the troubled mortgage payers, you will not face problems if you approach an HUD-approved counseling agency. Also check the reputation and track record of people who approach you for help. |
| I should stop making my monthly mortgage payments to get quick mortgage payment assistance and get out of the trouble immediately. | This is probably the biggest myth about home foreclosures. Always remember that there are no short cuts in life. The more you delay your payments, the more would be the negative effect on your credit score and this will affect your chances of getting a mortgage again. The lenders should feel that you are trying your best to pay off your dues. |
| There are no laws or rules to protect the interests of people facing it difficult to make mortgage payments. | This is not at all true. The Real Estate Settlement and Procedures Act and the Fair Debt Collection Practices Act help the people protect their rights. |
| My lender is only interested in grabbing my property. | This is yet another common myth among mortgage payers. The fact is that even your lender does not wish to take possession of your home because the entire foreclosure process is time-consuming and the lender has to spend money for maintaining the property. The lender just wants his money back with interest in the specified period. |
| My lender will ask me to immediately leave the property after defaulting on mortgage payments. | Again, this is just a myth. Banks ask homeowners to leave only after the property is sold in an auction and the deed transferring process is done. |
| After the foreclosure is done, the bank will take away my personal belongings. | The bank takes only those items which are attached to the home. All other personal things will remain with you. |
| In the foreclosure process, I do not have to pay any legal fees to the bank. | This is not true. Homeowners promise to pay the bank the legal fees after signing the mortgage agreement. |
There are many people who wonder how long after a foreclosure can I buy a home. Now, answering this question is a bot tricky as it depends on your credit score and the policies of the lenders. However, if you can prove to your lenders that you are trying hard to rebuild your lost credit and that default occurred because of some situations which were out of your control, then you can expect to get a mortgage after a few years.
Myths and Facts for the Buyer
We have already discussed the myths and facts about foreclosure from the mortgage owner’s perspective. There are also some myths in the minds of people who wish to buy the foreclosed properties. The biggest myth is that these properties are not good investment options as compared to other properties in the market. However, this is not at all true and the fact is that these properties have yielded the best returns for those who went for them. Some people also believe that these foreclosed properties are not well maintained which is also not true. It is possible to find properties which have been well maintained, only you have to get in touch with the proper source to know about them. Another myth regarding bank foreclosed properties is that people think that they can be bought cheap. This is not at all true. Though these properties sell at a discount as compared to the ongoing realty prices, the prices are only 25-40% lesser. So instead of getting disappointed, go ahead and find out a well maintained property and do something about it.
The above mentioned home foreclosure facts and myths will help you plan your mortgage payments properly and fulfill all the needs of your lenders. So, think wisely and take the right decision to own your home permanently.