The real estate industrialists and economists have been predicting foreclosures to rise once again in the near future. Foreclosure is a situation in which a homeowner is not able to make payments on his/her mortgage, due to which the lender (bank or a society)seizes and sells the property keeping in terms with the mortgage contract.
A Closer Look – Are there any Benefits of Foreclosure?
This may sound unfortunate but then one never knows if this is one of the best opportunities knocking at their door. It is true that in a few cases to avoid foreclosure, creditors try to adjust the repayment schedule to allow the owner to make the payment and retain ownership of their property. This situation is called mortgage modification. But after being given this extra time, if the owner is unable to repay the concerned amount, foreclosure takes place.
Taking a closer look at foreclosure, people, especially real estate investors may realize that it is actually an opportunity that could make their life. The houses listed for foreclosing and up for sale might just be what they are looking for.
Real estate consultant Jeff Adams explains this phenomenon in detail.
According to Jeff, houses under foreclosure are often sold at a cheaper rate than what they are originally or initially available for. This selling and buying of foreclosed property tends to happen as early as possible because the seizer of this property is in a hurry to sell the home and get back his mortgage. Even though it is an unfortunate situation for one, for another it is a gain.
The real estate world follows a simple rule; one’s loss is another’s gain. Keeping in mind the fact that the real estate is a world compiled of its own risks and benefits, foreclosures can prove beneficial to one in plenty of ways.
The Positive Aspects of Foreclosure
Foreclosure might be that contingency that brings one’s dream house to them. The deal is to keep up and seize the moment at the right time. Let’s consider the following points.
Firstly, Foreclosed property can be purchased at a very low rate and this is because of the huge loss that the society or the bank might incur. This is why during such times the properties are sold at very low prices.
Also, the demand for good property in the real estate market is usually always high. This gives one an opportunity to buy and sell the property at the higher price thereby making a considerable profit.
An important point to consider while one wishes to buy foreclosed property is that of pre-foreclosure. Pre-foreclosure is that term before foreclosure takes place. This means the property has been listed but is not yet announced to be foreclosed. If one manages to get their hands on pre-foreclosed property it is the best deal in regards to costing and the condition of the house because unlike foreclosed property, pre-foreclosed property is allowed to be scrutinized.
Connection between Hedge Funds and Foreclosures
Foreclosure might have been the latest talk of town but then there are Hedge Funds. These funds are considered when the direct associated market is on the rise. Hedge funds gather that there is attainable profit that can be seized with ease especially keeping in mind that the demand for foreclosures is greater than its supply. (This is usually the case)
These funds buy the foreclosed property to convert it into nuclear family rentals. Since they have a huge pool of financial funds with them accompanied by the information course these are entities that I would refer to as the Ace card or the Trump card.
The role of Interest Rates in Foreclosure
Interest rates affect foreclosures in many ways. Those dealing with the loss of their homes may see a rise in the interest rates on current loans as well as the new ones. But considering another aspect, many foreclosures can have an even more conflicting effect to any society’s tendency to borrow, depending upon how the situation pans out.
Also, these very same people will face higher interest payments for many years even after the entire situation has subsided. Their credit equation has high chances of going down regardless of whether one managed to save themselves from foreclosure or their property from being seized.
In Conclusion
To conclude it all, foreclosure can definitely be a boon, a blessing by being a gift to one in the form of their dream home not only at a cheaper rate but also in an attractive condition. This buying and selling of property can lead to a lot more than one might have predicted. According to Jeff Adams this is all a part of the real estate game. Some win, some lose and someone’s loss is another’s gain. What matters is whether one seized the opportunity that came rolling their way.
