Nearly everywhere, you can buy real property at an auction. In some states, there is what's called Redemption Laws; the deed or title for this type of purchase is special and has specific rules attached to it. The title you hold is not clear yet, or in simpler terms: temporary. This means that in a matter of months, the former owner from which the property has been auctioned can reclaim the property -the title is defeasible or can be defeated.
Redemption Rights: If you buy the redemption rights from the owner at the time of the auction, you will own the title and the rights and therefore be able to get clear title. A redemption purchase should also be notarized. You should consult a local attorney, because each state differs in the way in which this should be handled.
When purchasing redemption rights, you may be dealing with an owner who is under a great deal of stress and may not be aware of the amount of equity they have in their property. Though they may be able to get more for their redemption rights, the rule of thumb is to offer the owner $1,500. They may ask for more, but you should weigh the amount of equity involved.
Purchasing Property
Acquiring Property:A lot of hopeful homeowners, besides scouting out good property, usually start with getting a loan. A note is the borrowed money, say $200,000. When you use that note to purchase real estate, you are issued a mortgage or deed of trust -this is the security instrument. So when you're paying off your loan, it's called paying off your mortgage. If you, the owner and borrower can no longer pay for your mortgage, your property can be foreclosed -that is repossessed, confiscated, or taken as collateral. Or, depending on certain factors, the lender can see you in court.
The relationship between notes, deeds, mortgages, foreclosures, borrowers, etc:
3 parties are always involved in a deed of trust sale:
Trustor: otherwise known as the Borrower
Beneficiary = Person lending the money (mortgagee)
Trustee = Party handling the transaction
So, in a Deed of Trust state, the Trustee would be the person to file the foreclosure on behalf of the Beneficiary. However, in a mortgage state, the mortgagee would hire a lawyer to start the foreclosure process. The Deed of Trust and a mortgage are two separate security instruments, but they perform the same function. They both secure the property as collateral.
In the event of a foreclosure, there are usually 2 major ways to handle it:
Equity Split
Equity Split
Sometimes however, should the property and case require it, there is the "subject to" transaction which bases purchase on the existing financing of the real property. - 23309
Redemption Rights: If you buy the redemption rights from the owner at the time of the auction, you will own the title and the rights and therefore be able to get clear title. A redemption purchase should also be notarized. You should consult a local attorney, because each state differs in the way in which this should be handled.
When purchasing redemption rights, you may be dealing with an owner who is under a great deal of stress and may not be aware of the amount of equity they have in their property. Though they may be able to get more for their redemption rights, the rule of thumb is to offer the owner $1,500. They may ask for more, but you should weigh the amount of equity involved.
Purchasing Property
Acquiring Property:A lot of hopeful homeowners, besides scouting out good property, usually start with getting a loan. A note is the borrowed money, say $200,000. When you use that note to purchase real estate, you are issued a mortgage or deed of trust -this is the security instrument. So when you're paying off your loan, it's called paying off your mortgage. If you, the owner and borrower can no longer pay for your mortgage, your property can be foreclosed -that is repossessed, confiscated, or taken as collateral. Or, depending on certain factors, the lender can see you in court.
The relationship between notes, deeds, mortgages, foreclosures, borrowers, etc:
3 parties are always involved in a deed of trust sale:
Trustor: otherwise known as the Borrower
Beneficiary = Person lending the money (mortgagee)
Trustee = Party handling the transaction
So, in a Deed of Trust state, the Trustee would be the person to file the foreclosure on behalf of the Beneficiary. However, in a mortgage state, the mortgagee would hire a lawyer to start the foreclosure process. The Deed of Trust and a mortgage are two separate security instruments, but they perform the same function. They both secure the property as collateral.
In the event of a foreclosure, there are usually 2 major ways to handle it:
Equity Split
Equity Split
Sometimes however, should the property and case require it, there is the "subject to" transaction which bases purchase on the existing financing of the real property. - 23309
About the Author:
Want to know more about real estate? Log on to Don Burnham's website http://www.weknowthewayback.com and know everything from redemptions and foreclosure all under one roof.
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