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What Is Foreclosure? |
By:
Sal Vannutini |
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##Attn Ezine editors/Site owners## Feel free to reprint this
article in its entirety in your ezine or on your site so long as
you leave all links in place, do not modify the content and
include our resource box as listed above. Many of us have heard
the term foreclosure in relation to other individuals and
understand that it is not a pleasant term, but do not have a
firm grasp on what it actually means. Before we go any further
in discussing the profit potential available through
foreclosures it is critical that we define the term foreclosure.
Almost 100% of the population, minus the small segment that has
ready cash lying around, must finance a significant portion of
their home purchases. Most people cannot afford to simply pay
the actual cost of their new home up front. The actual
percentage varies from one individual to the next; but it is
common for prospective homeowners to finance anywhere between
80% -100% of the home purchase. The amount of that loan is paid
back over a period of time through a tool known as a mortgage.
We're probably all familiar with that term on a monthly basis
ourselves.
The part that really interests us is what happens next. In some
situations, the homeowner at some point in time will not be able
to meet the monthly mortgage note. This, of course, could occur
for a number of reasons. Bad financial decisions. Loss of
employment. Medical conditions. Whatever the reason, after a
certain number of late or missed payments the lender will have
no choice but to call the loan. Continuing with this pattern of
behavior would be a bad financial decision for the bank and
their stakeholders.
In almost all cases, the lender will provide an opportunity for
the homeowner to bring their payments up to date in an effort to
avoid foreclosure. In most cases, the homeowners are not able to
do this because they have become so mired down in financial
problems. At this point the bank begins to take action to
actually take back the house. This is known as foreclosure and
it is possible because the property was listed as collateral
when the loan was originated. While the word foreclosure leaves
a bad taste in the mouths of some people, it is actually no more
and no less than a business term. The bank agreed to lend the
homeowner money for the purchase and in exchange the homeowner
agreed to pay interest on the money with the stipulation that in
the event they could no longer meet the notes on the loan; the
property would be returned to the bank.
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Article Source: http://www.PopularArticles.com/article2799.html |
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