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How to prevent foreclosures

While browsing foreclosed property for sale by a bank, I chanced upon a condominium unit with a familiar unit number.  I checked my email and I found that the property being sold is the same property which was referred to me by its owner several years back, asking me if I could sell the unit within weeks. Since competition is tough in the area at that time with lots of development being sold, it was difficult to sell the property within the time frame provided by the client.

Now I am seeing it foreclosed and on sale.

How can a person eyeing to buy a condo unit avoid foreclosures?

First, before you buy, determine your end goal. Envision your end goal in mind. Are you buying because you want to lease? Are you buying because you are using the unit? Are you buying using bank financing or are you paying in cash? If you are paying using bank financing, how much are you supposed to be earning at the turn over date in order to pay your bank obligations?

Second, set realistic and conservative figures.
Look at your numbers and try to make assumptions based on your current or lowest income for the year. In looking at your monthly amortization payments, assume that only 1/3 of the income shall be available to pay for your monthly payments for a condo. That should be your guide as to how much you can invest for a unit of choice.

Third, check out your condo costs. You will be paying transfer fees, move in fees, and the monthly dues. Include this in your budget for the condo purchase.

Fourth, check your motivation? Are you in for the long term? Some condos are selling now for use later. You may be well off now but are you sure you are of the same financial capacity in 4 or 5 years from now? Refer to the second step and keep your numbers conservative.

Fifth, be mindful of your risk appetite. All investments have their respective risks. Make sure that you are entering an investment with open heart and mind. Set your expectations and limit the risks you can take depending on your age, current status, projected conservative earnings, and financial capacity.

Sixth, if you have already bought a property and you are sensing that you will not be able to pay within the next several months, you may: talk to the developer/seller and ask for a restructure of payment even before you default. Do not wait for a default payment and a demand letter from the developer/seller before you approach them.  The same is true with the bank. Negotiate a restructure term that is beneficial to both yourself and your bank.

Seventh, if there is already foreclosure proceedings, get a lawyer and try to pay the amount of the loan within 1 year from the time of the foreclosure sale. Buy back your property. Negotiate for a possible structure of settlement, if the bank or developer/seller will allow.



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