Losing your home through repossession is the last thing anyone wants. Although it’s the most feared situation of any homeowner, many make the mistake of almost “welcoming” it when they find themselves in the daunting circumstances of not being able to make their bond payment.
Homeowner’s often find they are unable to meet their financial obligations with the bank for a variety of reasons. The reasons may be illness, divorce, death in the family, redundancy to name just a few. Regardless of the reason, falling behind on your payments can be stressful and frightening. Many homeowners feel they don’t know what to do and feel trapped so they do nothing. This is a big mistake, there are ways and means to stop repossession of your home.
When homeowners first buy their home and sign for their bond/mortgage, they make an agreement with the bank to make monthly payments until the bond is paid in full. They have full knowledge that if they fail to make the payments, their home may be repossessed. However, once they begin to have severe financial difficulties, they tend to resign themselves to the fact that their home is going to be repossessed without fully understanding the consequences and many effects of repossession.
In spite of what many people believe about repossessions, banks don’t stand to make a large profit when they repossess a home. Homeowners also have the mistaken belief that if the bank repossesses their home and sells it, they’ll get a huge profit and give it back to the homeowner so they can pay off other debts. This is not the way it works when your home is repossessed in this country.
The bank does not care about the value of the home and have no real interest in owning the home or property. All they are interested in is selling the home for enough money to get their money back-only the money that is owed on the bond plus any possible expenses they’ve had to put out involving the repossession.
The home or property will be given to the Sheriff to sell at a Sheriff’s office. This must take place before the bank will become the new owner of the home. The bank will be at the auction to bid on the property; however, they will only be bidding as high as what is owed on the home bond. They’re not concerned with the true value of the home or if they could get more money than is owed. Once the home is finally sold to the highest bidder, the Sheriff will pay off all creditors and give the balance to the seller. Homes that are sold at a Sheriff’s auction seldom get sold for more than the homeowner owes the bank. So, one effect of repossession is that you will lose your home and will not get any of the money. As mentioned previously you are able to prevent repossession if you explore your options.
Another major effect of repossession is that your financial situation will be affected for many years. If you’ve undergone repossession, you will have difficulty obtaining credit for many years to come. This can and will affect your life in many ways, even possibly more than the actual repossession. These are things that should be considered carefully before you decide repossession is your only option.