As you’re looking through Ellicott City homes for sale, you may see some listed as foreclosures.
So what are foreclosures, and should you buy one?
What is a Foreclosure?
A foreclosure is a home that’s been through a legal process after its owner has been unable to make payments on it. It’s not a home in which the owner misses one payment – usually, foreclosure doesn’t take place until the owner misses several payments.
It’s like a repossession. When the person who borrowed money from a lender can’t make his or her payments, the lender takes possession of the house.
The borrower has to then move out of the home so the lender can sell it. The lender wants to sell the home so it can recoup some of the money it lost.
How Does Foreclosure Work?
After several months (usually three to six) of nonpayment, the lender will file a “Notice of Default” with the county recorder. The notice lets the borrower know that he or she is at-risk of losing the home.
The borrower can try to settle his or her debt with the lender.
If the borrower doesn’t settle the debt, the lender will most likely schedule a foreclosure auction to try to sell the home to someone else. But if nobody buys it, the lender becomes the owner – and it’s considered a real estate owned property, or REO.
Should You Buy a Foreclosure?
Sometimes buying a foreclosure means getting a great deal on a house you couldn’t otherwise afford. That’s because the lender wants to sell it to recoup its money – not necessarily to make a profit.
However, if you’re interested in buying a foreclosure, remember that the seller was likely out of money when the bank took the property back. That may mean that it’s in poor condition because the owner didn’t have money for maintenance, upkeep or repairs.
Most foreclosures are sold as-is, which means the lender won’t pay to fix anything. You can either take it or leave it.
Are You Buying a Home in Ellicott City?
If you’re ready to buy a home for sale in Ellicott City, we can help you find the right one.
Call us at 410-465-5822 to tell us what you want from your next home or to schedule a tour in a home you’ve seen online.
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