Learn About Foreclosures
By Jim Saccacio
Because the foreclosure market has been relatively dormant in recent years, many people don’t fully understand how foreclosures work. This lack of understanding can foster foreclosure myths that are dangerous both for homeowners who want to avoid foreclosure and buyers interested in purchasing a foreclosure.
Here are seven of the most common myths about foreclosures:
Myth 1: Foreclosures only happen in poor areas.
Foreclosures come in all shapes and sizes and occur in all neighborhoods. From low-income to million-dollar properties, you will see the full spectrum of homes entering into the foreclosure process. Economic forces such as rising interest rates and decreasing home values affect homeowners from all types of neighborhoods.
Myth 2: Financial irresponsibility causes most foreclosures.
While there are always those cases of financial neglect, most homeowners have shown some high level of financial responsibility in order to qualify to purchase a property in the first place. Unforeseen events such as job loss or a catastrophic accident can cause sudden and unpredictable financial havoc for homeowners. In addition, foreclosures also tend to increase when interest rates are up and property values begin to decrease. When this occurs, homeowners may find themselves paying higher monthly mortgage payments for a property that is no longer worth what they originally bought it for.
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