What is Foreclosure?
To understand the pre foreclosure sale, it helps to know what a foreclosure involves. Foreclosure occurs when the homeowner misses or fails to make mortgage payments to their lender. Simply put, foreclosure terminates the purchaser’s rights to the property that was bought under a mortgage agreement. This allows the lender to sell the property in what is known as a foreclosure sale.
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What is Pre-Foreclosure?
Pre-Foreclosure is a property status in which the homeowner is informed that the house may soon be repossessed. This usually happens based upon the homeowner not being able to make mortgage payments. It is typically the bank or mortgage lenders that initiate the pre-foreclosure stage. This process begins when the mortgage lender files a Notice of Default. This informs the homeowner that legal action and foreclosure may follow if the debt is not paid.
Buying a Pre-Foreclosure Home
If pre-foreclosure homes are for sale, you’ll see it listed as a pre-foreclosure property or short sale on real estate sites. Buying this type of property costs less and you don’t have to arrange for a mortgage and make a down payment like you would for a normal home purchase. Instead, you will cover what the current homeowner owes. That means you are responsible for the loan balance, any liens on the property and any unpaid mortgage as well as homeowners' insurance.
Buying a pre-foreclosure home is an opportunity to pay below market price. You will also face less competition than you would if you bought a foreclosed home at auction. However, before you look for a pre-foreclosure home, it is important to research the distressed property laws in your state and know about the pre-foreclosure process.
If you are not clear on how to buy a pre-foreclosure property then seek help from Brenda Kennedy at Kennedy Home Sales. We are your go to pre-foreclosure realtor and have a team of pre-foreclosure specialists to help you out in finding a great deal.
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Brenda Kennedy also helps homeowners get the property out of pre foreclosure. If you need any help with buying or selling your short sale or pre-foreclosure home then get in touch with us today.