Understanding Foreclosure
When a person has a mortgage on a home and can no longer make payments for one reason or another, often the result is foreclosure. Foreclosure is when the bank or company that offered the mortgage on the home takes the home away from the mortgage holder because of their inability to make payments.
For the average person who isn't a real estate agent or mortgage officer, foreclosures can be difficult to navigate and understand. There seems to be so many foreign terms associated with the concept that it can leave most of us feeling like we are in the dark. It is easy to get confused when foreclosure related terms are used.
There are a few foreclosure related terms that are important to know about. The first is lien holder. The lien holder is usually a bank or credit union. It is the company that offers the mortgage and therefore has put the money up for you to purchase the home. In some ways , the lien holder owns the home until you pay off the mortgage. If you fail to make payments on time, they can take the home, or foreclose on it.
Acceleration is another term you will hear in association with foreclosure. When something accelerates, it speeds up. Acceleration is the term used to describe the action of speeding up your loan repayment. If you are failing to make payments on the mortgage, the lien holder can accelerate the terms of the loan and require the entire loan amount be paid back.
In order to do this, there must be an acceleration clause written into your mortgage. Most lenders won't issue mortgages these days without an acceleration clause because it protects them. If they didn't have the ability to accelerate the loan, they could only seek to reclaim the amount you have failed to pay.
The lender might be able to get a judge to allow them to take back pieces of the land equaling the amount you have failed to pay, but this is a tedious process. It is safer for them to have an acceleration clause so that they can demand the full payment of the loan. Obviously, most people won't be able to make the payment which then allows the lender to foreclose on the home because you owed them the entire amount of the home and didn't pay it.
When it comes to foreclosure, there are a lot of details to try to take in. Understanding these few basic terms will help you make foreclosures just a little less foreign.
For the average person who isn't a real estate agent or mortgage officer, foreclosures can be difficult to navigate and understand. There seems to be so many foreign terms associated with the concept that it can leave most of us feeling like we are in the dark. It is easy to get confused when foreclosure related terms are used.
There are a few foreclosure related terms that are important to know about. The first is lien holder. The lien holder is usually a bank or credit union. It is the company that offers the mortgage and therefore has put the money up for you to purchase the home. In some ways , the lien holder owns the home until you pay off the mortgage. If you fail to make payments on time, they can take the home, or foreclose on it.
Acceleration is another term you will hear in association with foreclosure. When something accelerates, it speeds up. Acceleration is the term used to describe the action of speeding up your loan repayment. If you are failing to make payments on the mortgage, the lien holder can accelerate the terms of the loan and require the entire loan amount be paid back.
In order to do this, there must be an acceleration clause written into your mortgage. Most lenders won't issue mortgages these days without an acceleration clause because it protects them. If they didn't have the ability to accelerate the loan, they could only seek to reclaim the amount you have failed to pay.
The lender might be able to get a judge to allow them to take back pieces of the land equaling the amount you have failed to pay, but this is a tedious process. It is safer for them to have an acceleration clause so that they can demand the full payment of the loan. Obviously, most people won't be able to make the payment which then allows the lender to foreclose on the home because you owed them the entire amount of the home and didn't pay it.
When it comes to foreclosure, there are a lot of details to try to take in. Understanding these few basic terms will help you make foreclosures just a little less foreign.
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Danny explains mortgage loans for people with bad credit and mortgage loans bad credit.
posted by Debt Consolidation Loan at
2:32 AM
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