Explanation Of Foreclosure
Foreclosure happens when a person fails to make payments whatever the reason may be on their mortgage. Foreclosure is what the lender, usually a bank or credit union, does to try to recoup some of their losses since payments haven't been made. The lender essentially takes back the home from the borrower.
Foreclosures can seem complicated since there are so many different terms associated with them. Real estate agents and loan officers might know these terms like the back of their hands, but to the rest of us, it would be easy to get confused when terms start to be used.
Lien holder is another term important to understand as it relates to foreclosure. The lender, usually a bank or credit union, gives you money to finance your purchase of the home. This means there is a lien on the home. In truth, the lien holder has the power to take back the home, or foreclose on it, if you don't keep your contractual obligations.
Acceleration is another term you will hear in association with foreclosure. When something accelerates, it speeds up. Acceleration is the term used to describe the action of speeding up your loan repayment. If you are failing to make payments on the mortgage, the lien holder can accelerate the terms of the loan and require the entire loan amount be paid back.
With the acceleration clause, a lien holder can demand that the entire mortgage be due within a certain time frame thus accelerating the due date of the entire loan. This is what allows the lender to declare the entire loan is in default. With this clause, the lender has the right to say you owe us the full amount you borrowed and if you can't pay it, we are foreclosing on the home.
The lender might be able to get a judge to allow them to take back pieces of the land equaling the amount you have failed to pay, but this is a tedious process. It is safer for them to have an acceleration clause so that they can demand the full payment of the loan. Obviously, most people won't be able to make the payment which then allows the lender to foreclose on the home because you owed them the entire amount of the home and didn't pay it.
Even though foreclosure can seem like a tedious concept to understand, knowing these terms will help you navigate your way through and hopefully even avoid foreclosure. Understanding the terms will help you be able to communicate better with your lien holder so you feel like you are not left in the dark.
Foreclosures can seem complicated since there are so many different terms associated with them. Real estate agents and loan officers might know these terms like the back of their hands, but to the rest of us, it would be easy to get confused when terms start to be used.
Lien holder is another term important to understand as it relates to foreclosure. The lender, usually a bank or credit union, gives you money to finance your purchase of the home. This means there is a lien on the home. In truth, the lien holder has the power to take back the home, or foreclose on it, if you don't keep your contractual obligations.
Acceleration is another term you will hear in association with foreclosure. When something accelerates, it speeds up. Acceleration is the term used to describe the action of speeding up your loan repayment. If you are failing to make payments on the mortgage, the lien holder can accelerate the terms of the loan and require the entire loan amount be paid back.
With the acceleration clause, a lien holder can demand that the entire mortgage be due within a certain time frame thus accelerating the due date of the entire loan. This is what allows the lender to declare the entire loan is in default. With this clause, the lender has the right to say you owe us the full amount you borrowed and if you can't pay it, we are foreclosing on the home.
The lender might be able to get a judge to allow them to take back pieces of the land equaling the amount you have failed to pay, but this is a tedious process. It is safer for them to have an acceleration clause so that they can demand the full payment of the loan. Obviously, most people won't be able to make the payment which then allows the lender to foreclose on the home because you owed them the entire amount of the home and didn't pay it.
Even though foreclosure can seem like a tedious concept to understand, knowing these terms will help you navigate your way through and hopefully even avoid foreclosure. Understanding the terms will help you be able to communicate better with your lien holder so you feel like you are not left in the dark.
posted by Debt Consolidation Loan at
11:54 PM
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