Home Foreclosure

Why Are There So Many Home Foreclosures?

It seems like everywhere you look, there are home foreclosures. No neighborhood is safe from the dreaded auction sign and almost every week in some areas, you’ll find at least one foreclosure is about to happen. Now, many of us know about the economic problem in the United States, but if you don’t know what helped to cause the problem, you won’t be able to help rebuild your own economy and the nation’s economy.

Why the Home Foreclosure Crisis?

Shortly after September 11, 2001, it was decided that Americans needed to begin looking forward. The idea was for the American people to not only survive, but live well and prosper. Large, expensive customized homes began being built and everyone wanted one, no matter how much money they made. So, to meet demand, people began getting adjustable rate mortgages on their large, beautiful homes. The idea that they would pay a low interest rate on their mortgage for the first five years, and then it would adjust to a higher rate. Other people agreed to an interest only mortgage for about five years or so.

The idea was that people’s income would go up, or the value of their homes would go up and they could refinance at a much lower fixed rate. In theory, the plan was great and many people were living their dreams. It was a seller’s market and life seemed great. Then the floor came out from under millions of Americans because there was a sudden shift in the market. People’s mortgages were adjusting and their home values were dropping.

Struggling to pay an adjustable rate mortgage each month left millions drained of resources, but the inability to refinance due to overburdened budgets and negative equity in many homes has caused many home foreclosures in the past couple of years.

Why It’s Good For You

All of these home foreclosures can be good for you, if you know how to use them to your advantage. First of all, look at the lessons behind the housing crisis when you are considering purchasing your next home. Always stay within your budget. Home values may not be dropping anymore, but they aren’t skyrocketing either and this means that you need to plan according to your current budget and choose a mortgage that you can live with for the time that you’re in your home. While the opportunity to refinance could arise sometime in the future, you don’t want to plan for it.

Now, if you are currently shopping for a home, don’t rule out a foreclosed home as your next home. You might actually get a really good deal on your next house, but you should know that many banks don’t negotiate on foreclosed homes and you usually take it as is, which means that if there is any damage or repairs, you’re likely to wind up fixing it for yourself. However, the plus side is that many times, banks want to get houses off their hands and are willing to let them go for substantially less than they are valued at.

Home foreclosures are sad and right now, it seems as if there is one happening in every neighborhood in the country. There are some lessons that can be learned from all of these foreclosures and some bargains to be had, but home foreclosures are no joke.

Foreclosures and Losing Your Home

Millions of homeowner are currently in danger of losing their homes. Why? Because of foreclosure. Due to the high unemployment rate, poor job outlook, rising fuel and food costs, many homeowners just can’t afford their homes anymore. If you find yourself in this situation, you may be unsure as to what you should do.

One of the most common questions asked by those facing foreclosure is when you should just accept your fate. In all honesty, this is a step that most homeowners are advised against taking. Before deciding to give up on your home and move, it is important to know and familiarize yourself with your options. First, know that there is help for you. This help can come from an attorney specializing in real estate or foreclosures, a HUD approved housing counselor, or even your financial lender.

If you are a homeowner, foreclosure should not come as a surprise to you. You will receive numerous phone calls and letters from your financial lender, even before the foreclosure process begins. If you intend to act, now is the time to do so. If you are faced with only temporary financial hardships, such as an injury that will keep you out of work for three months, speak to your lender. They may be willing to workout a temporary payment plan with you. This plan may result in short-term lower payments. Remember, the sooner you act, the better your chances are. Lenders are less likely to work with you when you already owe them a large amount of money.

As it was previously stated, you may want to seek help from an attorney that specializes in foreclosures. Many are familiar with steps that you can take to stop your bank from foreclosing on your property. One of those steps may involve declaring bankruptcy. In some states, this is enough to cause a bank to hold off on the process of foreclosure. Also, an experienced lawyer may make it so that your home cannot be touched during bankruptcy.

Regardless of which action you decide to take, you should do so with the assistance of a trusted professional. However, it is important to make sure that you seek that assistance in a timely matter. For example, in some states foreclosure proceedings cannot be stopped once they have started. That is why as soon as you notice financial problems or receive an intent to file foreclosure notice from your lender, you need to act and fast.

Once the foreclosure proceedings have started, like when you see your property listed for sale online or in the newspaper under foreclosure auctions, you may need to start accepting your fate. Many of your friends and family members will encourage you to stay and fight, but you may suffer legal consequences for doing so. Banks and new property owners can legally have you evicted from your home and you will need to move.

This is also the point in time when many homeowners are thinking of ways to stay in their home. Renters are encouraged to speak to the new property owner to see if they can continue renting and living in the rental unit. This approach often works for renters, but it is unlikely to work for you. If your home is a single-family home, it will likely be lived in, not used as a rental property. Although you can ask or even beg to stay in the home, you may want to start getting your belongings and finances in order.

Rental apartments usually require security deposits. Make sure you can afford this required deposit. Look into other fees and expenses, such as the cost of renting a moving van. Start looking for affordable apartments or make arrangement with friends or family members right away. If you are not prepared or choose to ignore your eviction notice, you may, literally, find yourself out on the street, if not in jail.

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