by Rachelle de Bretagne

Created on: May 13, 2007   Last Updated: May 20, 2007

To explain foreclosures, there are two viewpoints to the subject, because there are two sides to every coin and to discuss them fully both sides need to be addressed:

*Foreclosure from the point of view of a home owner.
*Foreclosure from the point of view of a potential buyer.

From the home owners point of view.

When you take out a mortgage, you are borrowing money from a financial establishment on set terms and conditions. They don't want to take your home away from you, although the value of the home is what they use as a guarantee that they will be paid. You sign documents to state that you will pay your monthly payments, and if you come upon difficult times and cannot pay, the bank have the right, after a sustained period of non payment, to take your home from you in full payment of the loan.

The problem with foreclosure is that the Bank are not overly interested in your interests. They want their money back, and will sell the home cheaper than the market value in some cases to get it.

Ways to avoid foreclosure are to discuss with the financial institution that gave the home owner the loan in the very early stages of difficulty, as all the Bank are interested in is getting their money, although they do take account of relationships with their clients, and sometimes in the early stages, negotiations can be made between lender and owner to extend mortgage periods and make the payments smaller and more manageable rather than foreclosure which causes hardship to both the lender and the bank, because it costs money to sell a home.

Foreclosure from the point of view of potential buyers.

Foreclosure homes often sell cheaper than their market value. These can be sold at auction, or on the general market, and inquiring of real estate agents about which foreclosures are for sale is a great way of finding homes that are cheaper. Beware though, because foreclosure homes are sold quickly, and it is essential to know whether the home is structurally sound, and to get reports before making offers, as buying a home without all the necessary surveys can be a real mistake and homes that look good on the surface may be hiding defects which will be expensive to repair.

If a home is a foreclosure home, chances are that the previous owners are broke, and here, looking at the kind of upkeep the home has had is important, since there may be more repairs needed than in an average marketplace home. Get electricians to check electrical items, plumbers to check the current plumbing and don't be afraid to probe, because you may be saving yourself money.

One mans loss is another man's gain. Foreclosure is an unfortunate result of non payment and can be avoided by discussion and adjustment of mortgage arrangements, by being honest from the start and getting the loan set up on terms that the home owner can honor.

Learn more about this author, Rachelle de Bretagne.
Click here to send this author comments or questions.