A bank foreclosure is not so different from other foreclosure processes. The main difference is that the bank was the society that granted the home loan. Thus it is also the bank the organization that repossesses the house when payments are not met.
Many times, when the economic conditions of a country are unfavorable, the value of the housing market in the USA and other regions plummets and you see many homes risking foreclosure.
Generally, houses go up for foreclosure when the borrowers of mortgage loans fail to fulfill their repayments when due as stipulated in the mortgage contract. In such a situation the bank that held the mortgage on the house in question has no choice but to repossess the home or other immovable property in order to sell it and get back all or at least part of the lent money.
Here’s how a bank foreclosure process works
- The bank financed a house
- The owner failed to meet his/her obligations when due
- The bank repossesses the mortgaged house
- The bank puts the property up for sale in an attempt to recover the debt money.
Three main misconceptions regarding bank foreclosures
Strange as it may seem, there are often misunderstandings about bank foreclosure homes. Many people are not aware that often buying foreclosure homes can be a very good investment.
This is what you should know:
1. Banks tend to set a lower price to their foreclosure houses
Buying foreclosure homes owned by a bank has one main advantage: Generally, banks prefer to sell fast even if they get a lower price. They are not interested in owning hundreds or thousands of houses. They want to sell them as fast as they can. That’s why bank foreclosure homes are frequently sold under their estimated value. This can be a favorable combination for investors or private persons that are in a position to take advantage of it.
2. Bank foreclosure properties are not falling to pieces
Rumor has it that most bank foreclosure properties are collapsing and starting to decay. Nothing further from the truth, these bank foreclosure homes are just like any other house for sale. Actually, more often than not foreclosure homes owned by banks are in very good shape.
The price of many of these foreclosure homes is often low compared to the regular housing market and they do not require too much fixing. This is not to say that you do not need to hire an appraisal expert and house inspection company to make sure that you know exactly what kind of repairs the property or house at issue needs.
3. Standard home loans are good enough
The third misunderstanding about bank foreclosures is that they are so expensive that only big investment companies or the very wealthy can afford to buy them. As we already said, a regular foreclosure and a bank foreclosure are very similar
It is true that there are investors that specialize in buying such properties, but not as many as people think, because they would not have cash left for anything else. Besides, any private persona that wishes to do so can buy a bank foreclosure with a regular mortgage.
A bank foreclosure shows us two opposite aspects. For those who could not make a foreclosure stop and lose their home it is the worst of disasters. However, hard-working families trying to buy a house at a reasonable price or real estate investors can reap the rewards of a bank foreclosure.