With all the news talking about foreclosures many people are still confused about the various meanings of the terms used when they are in the situation or are hoping to buy a new home at an incredible price.
The first thing to remember if you are facing foreclosure is that you have options. If you are looking to buy a home, you also have options. If you know, you are heading to foreclosure you can sell your home in what is called a short sale if you can negotiate with the lender to take less than what you owe on your home loan. However, the lender is not in most cases, going to do any type of negotiating until you have received a notice of default on your home loan. A short sale can be good for both the homeowner and the potential buyer, as both will benefit as will the lender. The homeowner will be able to sell their home, get out of the loan agreement, and save their credit. The new homeowner will, in most cases, be able to purchase a home at a great price and obtain their dream home. Even though the lender will not be getting the full amount owed on the loan, they will be avoiding the cost and time it takes to foreclose on the property.
A pre-foreclosure is another option that can also be beneficial to all involved. In this case, you can talk with a realtor and put your home up for sale before you receive the notice of default. In the majority of cases, most individuals wait until they receive a notice of default.
REO is real estate owned property. This means the bank or other lending institution owns the property due to default on the loan. Once the property gets to this stage, you will need a professional by your side if you wish to purchase the property. In some states across the US, the lender will take bids on the property and in most cases will take the highest bidder. This is a long process and for those that are looking for a home instead of an investment the outlook is not as great.
In order to know your rights as a homeowner facing foreclosure you should contact a professional and licensed real estate agent in your local area as well as a real estate attorney. If you are a home buyer, you should do the same if you are looking to purchase a home in pre-foreclosure, foreclosure, or REO. The only way to ensure you find the home or your dreams or you save your credit rating is to do your homework and understand the laws in your state regarding the procedures.
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