What is Foreclosure?
Foreclosure is a legal process where your home is put up for sale by the lender. It happens when your home is used as a collateral for a mortgage, but you default and aren’t able to pay back.
Then the lender can foreclose your home to recoup the remaining loan amount with the money generated by the sale of your property.
Who takes the decision to Foreclose?
After you default on mortgage payments, the bank or financial institution that lent you the money for your home decides if and when to foreclose.
Are there any negative consequences of a Foreclosure?
The biggest drawback of a foreclosure is that you end up losing your home, and all the home equity you might have built over time.
Foreclosure also has a huge impact on your credit report and score, making it very difficult to get other loans after a foreclosure.
What if the foreclosure generates more money than the amount left on my mortgage?
If the sale of your home generates more money than the balance remaining on your mortgage, the extra amount is yours to keep. The lender only takes the amount of the loan you haven’t paid off.
What if the sale generates less money than the mortgage balance?
If the Foreclosure doesn’t make enough money to pay off the outstanding balance, you still owe the lender the difference.
How can I prevent Foreclosure?
There are 2 ways to prevent a foreclosure – either by renegotiating the mortgage repayment terms with your lender, or by declaring bankruptcy.
Podcast: What is Foreclosure and How Can You Prevent It
Fun, informative and concise episodes by a 10-year old, breaking down complex financial concepts in a way that kids and beginners can understand. Episodes cover personal finance topics like saving, investing, banking, credit cards, insurance, real estate, mortgage, retirement planning, 401k, stocks, bonds, income tax, and more, and are in the form of a conversation between a cowboy (a finance novice) and his friend, a stock broker. Making finance your friend, only at Easy Peasy Finance.
A little bit about me: I have been fascinated with the world of personal finance since I was 6! I love to read personal finance books, and keep myself updated on the latest by reading various personal finance magazines. My friends often ask me questions about finance because they find it complex and intimidating. That’s what inspired me to start my YouTube channel called Easy Peasy Finance when I was 8, and this podcast 2 years later.
Everything you need to know about foreclosure: What is Foreclosure, Who takes the decision to Foreclose, Are there any negative consequences of a Foreclosure, What if the foreclosure generates more money than the amount left on your mortgage, What if the sale generates less money than the mortgage balance, How can you prevent Foreclosure, and more.
Show notes and transcript at: https://www.easypeasyfinance.com/what-is-foreclosure-and-how-can-you-prevent-it/
