This will delete the page "What is Foreclosure and how does it Work?"
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Foreclosure is the legal process a lender uses to take ownership of your house if you default on a mortgage loan. It's pricey to go through the foreclosure procedure and causes long-lasting damage to your credit history and financial profile.
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Today it's relatively unusual for homes to enter into foreclosure. However, it is essential to understand the foreclosure process so that, if the worst occurs, you know how to endure it - and that you can still go on to grow.
Foreclosure meaning: What is it?
When you take out a mortgage, you're consenting to use your home as collateral for the loan. If you stop working to make prompt payments, your lender can reclaim your house and sell it to recoup some of its money. Foreclosure rules set out precisely how a lender can do this, however also offer some rights and protections for the homeowner.
At the end of the foreclosure process, your home is repossessed and you should leave.
Just how much are foreclosure costs?
The typical to pay around $12,500 in foreclosure expenses and fees, according to information from the Consumer Financial Protection Bureau (CFPB).
The foreclosure procedure and timeline
It takes around 2 years on average to finish the foreclosure procedure, according to information covering foreclosure filings during the 3rd quarter of 2024 from ATTOM. However, non-judicial foreclosures can take just a couple of months.
Understanding the foreclosure process
Typically, your lender can't initiate foreclosure unless you're at least 120 days behind on your mortgage payments - this is called the pre-foreclosure period.
During those 120 days, your loan provider is also required to offer "loss mitigation" options - these are alternative plans for how you can catch up on your mortgage and/or deal with the situation with as little damage to your credit and financial resources as possible.
Examples of normal loss mitigation choices:
- Repayment plan
This will delete the page "What is Foreclosure and how does it Work?"
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