What is a foreclosure?
A foreclosure is a property in which the home owner stopped making payments on this property, walked away from the loan associated with it and gave it back to the bank that held the loan. Simply put, it is a termination of all rights the owner has covered by a mortgage and is a process in which the estate becomes the property of the lending institution.
Why do Minnesota sellers go into foreclosure?
As described above a home owner goes into foreclosure when they stop making payments on the house they own and give the property back to the bank.
Home owners stop making payments for a number of different reasons:
- Laid-off, fired or quit their job
- An inability to continue working due to medical conditions or other reasons
- Excessive amounts of debt and mounting bills
- Differences with a co-owner such as a divorce
- Job transfers to another state
- Loss of equity in the house due to housing market conditions
- Change in monthly mortgage payment rates
Any of these reasons might lead to a home owner not being able to make their payments on their house loan or just simply not choosing to make their payments.
Why are Minnesota foreclosed homes attractive properties to buy?
When a Minnesota house has gone into foreclosure, the bank now owns it. Banks are in the business of lending money and making interest on their money that is lent out. Banks are not in the business of selling houses nor do they typically look at selling houses as a way for additional income, especially since the home owner who left most likely left because the house was worth less than they paid for it or that the bank was owed. Since banks are not in the business of selling houses they typically will look to dump the houses they own as fast as possible to get their cash back. Banks sometimes then tend to list their houses for sale at or below market value to ensure a speedy transaction to recoup what money they can. This is why foreclosed homes are attractive homes to buy.
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