Though it is true that buying Fall River MA homes that were foreclosed could mean huge savings for you, there is also a chance that there are a couple of little surprises that the bank that owns the property has conveniently left out in the description of the house; and one of these nasty little secrets might be that the house you are interested in actually has a second mortgage on it.
What is a second mortgage?
You might know what a standard mortgage is (a loan amount given by a bank to finance the purchase of a house), but what do you know about second mortgages? A second mortgage, also known as a home equity, is a type of loan allowing the homeowner to borrow an amount against the value of his property; the homeowner is basically putting up his home as a collateral for the loan amount.
The term “second mortgage” comes from the fact that the borrower must first settle the mortgage on the house first before they can even make payments on the second mortgage. The recent financial crisis caused people to take up a second mortgage on their homes so they will have enough money to at least survive. The problem with this is if the homeowner is having enough trouble with their first mortgage as it is, they also need to worry about the growing interest costs of the second mortgage as well; and this usually results in the bank foreclosing the property and putting it up for auction.
Why do you need to know about second mortgages?
When you are buying a foreclosed house, the bank is required to furnish prospective buyers with information regarding the existing mortgage amount or secondary mortgage amount for the house; but they are not required to show both. So you may think you are getting a great deal on a house, but what you do not know is you are also inheriting the debt of the previous owner, and this would result in your credit score taking a massive dive.
Before you even consider making an offer on foreclosed Fall River homes, it is a good idea to get the help of an experienced real estate lawyer to check into the details of the house to make sure you are not walking into a situation you may have a hard time getting out of later.