Use Home as Collateral? Be Careful of Foreclosure!

Instead of getting stressed to think about how to stop a foreclosure, it would be better to think twice before choosing the property to back up the secure loans. Yes, here we are going to talk about few things to learn well before making the decision, which can lead you losing your precious property.

When it is difficult to find a loan, the house is usually a leading investment that can be used as collateral to get loans from the bank money. Somehow, are you sure the value of your home guarantee is in line with the forecast?

Have you ever thought that the amount of loans obtained from the lending institution or bank is not comparable with the price of the house Generally, the amount of funds received by the applicant guarantee is not an appropriate nominal price of the house? The bank will usually provide about 70-80 percent of funds from the price of the house is pledged. Or, the bank will rate the house through appraisal team.

After assessing, the bank will make several approaches to provide the price. Usually, the market price approach and cost approach become the way used by the bank. The bank will then ask about the price of land and houses, and find out information through neighbors around the house.

If all the information has been known by the bank, of course, you cannot bid or increase the loan proposed. Moreover, the nominal of the loans is given amounts below the market price of the house. So, still sure want to make the house as collateral? Take time to get the advice from the financial advisor or another professional who can help you get the loans without impact on your property ownership. No matter what you face and how urgent something, which requires you to get money from the lender, a home must be your precious property as always.