What is Foreclosure
In everyone’s life can arise from such circumstances, when it becomes impossible to pay for the house. Then the question arises – what to do? How the situation will develop in the future? What can be done to minimize any possible negative consequences? That’s when we hear this terms Foreclosure.
Foreclosure – is the loss of ownership of real estate and transition of the rights to the lender.
Many people before making a decision about buying real estate are asking: “What will happen if I cannot pay for their homes,” Indeed, as long as the housing is not paid, its legal owner is the bank that granted you a loan (mortgage). Those. mortgage – this is the promise of property to the creditor as a guarantee for the loan.
If, for any reason, you cannot pay your mortgage, the bank will take steps to ensure to get their guarantees (i.e. your property) and thus compensate for their losses. This is called foreclosure process. This process is applying according to the rules set forth in the document “Law of Property Act”. As a rule, you can get a maximum of 6 months’ grace period. During this time, you should try to pay off debts.
For example, you can sell a house and pay off all debt. It’s good that if your debt is very high, the situation in the housing market may not allow you to sell a house for a sum sufficient to pay off your debts (as well DETAILS Service, lawyer, etc.). The court may reduce the deferral period may in depending on what it thinks your chances that you settle your balance. Taken into account as the size of your debt. For example, if you have more than 90% of the cost, the bank is likely to achieve a significant reduction in life. If you do not repay the debt, the bank will take your home and put on sale. You have the last chance to regain the housing (even if the court has made a decision and issued a “Final Order for Foreclosure”). Otherwise housing will be sold.
What Does Foreclosure Actually Do to My Credit
After the sale, the bank will pay taxes in the first place, pay services of lawyers and DETAILS, who participated in the transaction. After that, the bank takes the money, which he was to receive according to your agreement with them. Then they will be repaid all other debts related to your real estate. You get the rest of the money (if any remain). As you know, your credit history will be significantly damaged.
It should be noted that in case of death or loss of property, usually there is insurance, which covers the remainder of the mortgage and, in the case of death, allows the heirs to receive a fully paid to housing.
In addition to all the above, let me remind you that you still need housing. The street will not be live. “And what will happen if you cannot pay the rent?”. The idea is about the same, “Notice to Vacate”. After that you will have some time on something that would pay off the debt, or, eventually, you will be evicted.
In both cases, there are ways how to stretch the stay “free”, but eventually you will find yourself in a bad situation and major problems in the credit history.