How Long do you Have to Pay Off a Foreclosed Home?

October 1st, 2009 | Tags: Foreclosed Homes

foreclosed home

There is actually a redemption period during which you could make all the unpaid mortgage payments and still get back your house even after the foreclosure auction has been done. Even during the foreclosure process, which can last anywhere between 6 months to 1.5 years, you can repay the unpaid amount and get current on the mortgage loan amount.

If you have been declared insolvent, then you don’t need to make any payments on the foreclosed home. Moreover, you can also apply for a tax relief if you fill in form 1099-C that reflects the amount of the mortgage loan that is waived off by the loan service providers.

However if the IRS finds that you are solvent, then they may tax you for the income that you received on account of not paying back the loan that you took from the lenders.

Investors don’t need to pay for the previous homeowners unpaid mortgage amount

In case you are an investor who is buying the home from a foreclosure auction, you don’t need to pay any mortgage amount that was remaining by the previous owner to the lender. In case you are buying a foreclosed home that has become a lender owned property, you would be taking out a fresh mortgage loan to pay for the home. In most cases the purchase price would be far lower than the auction price and even the original price of the home.

However the homes that are lender owned may have a number of repairs that were not done by the previous homeowners. Get this checked out before you purchase the property. The purchase price on this property can be lowered to the extent of the repairs that are required by the home.

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