Does Foreclosure Slash the Net Worth of a House?

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Foreclosure is something that many people may not be that well versed in and that they may not know much about overall. It can affect the overall value of your home and can truly change the overall value of homes in the area as well.

The act of Foreclosure is something that anyone can learn about and that can truly make a difference in your overall knowledge base.

What is Foreclosure?

Foreclosure is the process by which a bank or lender can repossess or take possession of a home or property for which the borrower has not paid the mortgage or the loan on. A great way to look at this is if you have a loan on your home and you are not able to make your payments, most lending agencies are going to attempt to collect and allow you to get a certain number of payments behind before they take any action. Foreclosure can be very scary; it can be intimidating and without the right information it can make you very scared for the future of your home.

Your lender may allow you to be six months behind for example before they foreclose on the property and they may also offer you a chance to pay and come current on your loan before they start the foreclosure process. Your lender is going to contact you about your past due payments, they will try to work out a plan for repayment with you, and when that fails, they will take possession of the home or property in an attempt to come get the remaining value of the loan from the auction or sale of the property. The lender will take possession and will then sell the property in an attempt to recoup the remainder of the loan. If the property sells for less than is left on the loan, the borrower is responsible for paying the difference.

Does Foreclosure Lower the Value of a Home?

It does not initially if the home is still in good shape. If the home is simply foreclosed on and has not had any damage and is sold promptly, it does not affect the value of the home. The issue that arises with the value of a home and foreclosure is when the home sits for a very long time and falls into disrepair. A great way to think of it is a home that was kept well while people lived there then the people vacated. Immediately after the people vacate it is still worth what the home was worth and there is no loss of value.

As the home sits for months or for however long it takes the bank to sell the property, it may start to lose value as it falls into disrepair. A home is only going to retain value as it is cared for and when a home sits for months on end, it is going to lose value. Things are going to start to break, if the electricity is turned off and the water is not the pipes might burst. During the very hot summer months bugs and other rodents might move in and mold can grow. When the home is not inhabited, it does start to fall into disrepair, and it can start to lose value.

As a general rule a home is not going to lose significant value if it was in good shape when it was foreclosed until it sits for a prolonged period of time. For every seven percent of value that the foreclosed home loses in value, the homes around it can lose up to one percent in value as well.

Fighting Foreclosure

You can fight foreclosure and with a good foreclosure lawyer you can start to fight the process and get your home back. If you are dealing with foreclosure and you want to fight to keep your home, you can get a lawyer to help fight your case and help you to get your payments back in order and find the repayment plan that is going to work for you and for your particular situation.

Fighting a foreclosure is going to be mainly working to reaffirm your loan and to make sure that you do have the opportunity to get your home back and work to make sure you are able to keep your home and pay for it. Your home is so important and without the right payment plan you can fall into debt and you may be facing foreclosure. In many cases you can work with your lender before you get to the foreclosure step to make sure that you are going to be given the best chance at paying for your home and keeping it.

Foreclosure is a process that does take a long time to transpire. You are not going to be foreclosed on after missing one payment. In many cases it does take a few months for a foreclosure to occur. A good lawyer is going to be able to help you to get your foreclosure in order and to really get the process under control.

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