You hope that investing in real estate is one of the best ways to get a good return on your money. But if you give someone the money they need to buy their own home, your money is tied to how well they can pay back the loan. If they start to miss payments, you should start to think about what you can do. A mortgage calculator that focuses on foreclosure loss can help you figure out when to take action against the homeowners.
In theory, if the mortgage you're financing goes into default and you own the loan, you also own the property. But this doesn't mean that you will always make money or even not lose money if you have to foreclose. A foreclosure risk of loss mortgage calculator can point out a number of things you need to think about so that you don't let things get out of hand.
For example, the mortgage calculator might ask you to type in the amount of monthly interest you get on the loan. Then it asks how many months you didn't get any interest before the foreclosure. The more time you keep the people who don't pay there, the more this will cost. You'll be able to see where your money is going.
The mortgage calculator might want to know how much the loan is and how much the house is worth (remember: this is the value now, not when the mortgage was taken out.) This should work in your favour, unless the property's owners let it get in bad shape while they owned it. When people can't pay their mortgage, they sometimes stop caring about even the most basic maintenance.
The mortgage calculator also takes into account any property taxes that haven't been paid. Once you foreclose on the property, you become responsible for these, and if they haven't been paid in a long time, this could leave you with a big hole in your finances! First, there are taxes, then there are penalties, and finally, there is interest added to the total. Even though these are taken into account by the mortgage calculator, don't forget to follow up. Before a foreclosure, you can check to see if the property taxes are paid up by calling the county or parish where the property is located.
Another thing that the mortgage calculator might remind you to think about is legal fees. No matter how long you let the arrears go on, the legal fees will still be there when you come back. There will be legal fees for the foreclosure, and you will have to pay more legal fees when you sell the property to someone else.
On a mortgage calculator, you can also put in the following information:
- Even insurance for the property during the time between foreclosure and handing over the keys to the new owners.
- Any discounts you offer to sell the house quickly and not lose more interest than you have to
- Costs of selling
- Any clean-up and repair costs that need to be paid,
After all that, you start to wonder if you're actually making money. Well, using a foreclosure mortgage calculator before you have to foreclose will show you how important it is to work with your clients to help them keep their home.
