This timeline refers to how long it takes the lender to foreclose on the house and put it up for sale, and how long it takes to close on that house.
Before you decide to invest in foreclosed homes, you need to know the buying foreclosure timeline.
When you first look at the buying foreclosure timeline, you might be surprised at how much it varies from state to state. One state might give a borrower months to make payments on the property, while another lets the lender foreclose quickly. Lenders generally let a borrower miss one mortgage payment before contacting that homeowner. Some lenders allow two months for a person to get current on the mortgage. But after the borrower misses three payments in a row, the lender typically requires him or her to pay back the amount due and any late fees within 30 days.
If the borrower still doesn’t make payments, the lender has the right to foreclose. Usually, the lender will try to sell the house through an auction. You’ll notice ads for these sales in your local newspaper in the legal notices section.
It can take three months or longer after the lender forecloses for the home to be auctioned. Homes that don’t sell at auction are sold directly by the lender or through a realty company. These homes are called real estate owned (REO) properties. You can find REO homes advertised for sale on the websites of lenders, real estate agencies and in general foreclosure listings.
The buying foreclosure timeline from the day the borrower defaults on the loan to the day the house goes up for sale may be seven months or longer. In many states, the original owner has the chance to reclaim the property even after it is auctioned. This is called right of redemption.
If you buy a house at auction, you’ll still need to go through the closing process. This only takes a few hours when you buy at auction because you typically pay a cash down payment or cash for the entire purchase. If you buy foreclosed homes through a real estate agent, it might take several weeks to close on the house.
Don’t make the mistake of thinking all you need to do is sign on the dotted line to buy a foreclosure. The process actually takes some research and time. Understanding the buying foreclosure timeline helps you be prepared for the hurdles of the foreclosure process.
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