Banks have no interest in owning homes

On Behalf of | Nov 11, 2022 | Real Estate Transactions

The majority of homebuyers in the United States are not actually buying homes with their own money. Instead, they are going to a bank or another lender and getting a mortgage loan. They then use this loan to buy the property, but they have to pay the loan back over time.

If they fail to pay, then the home gets foreclosed upon. Some people believe that the banks are interested in doing this because then they get the money from the payments you’ve made and the property you were paying for. But this is not actually the case. Banks are not interested in owning homes at all, but simply take what action they have to take to protect their investment.

What does this mean for buyers?

Perhaps you’re in the market for a house. What this means for you is that you may want to consider looking into foreclosures or short sales as a potential way to get a good deal even when interest rates and inflation are high.

A foreclosure is when the bank has already reclaimed the home, but the institution wants to sell it as quickly as they can to regain as much of the previous loan as possible. A short sale is when the bank approves a sale for less than the value of the loan because they know that the person who took the loan out isn’t going to be able to pay it back.

In both cases, banks are just cutting their losses. They’re not trying to get every last cent out of a home sale. This means that buyers can sometimes use short sales and foreclosures to get houses for less than their total value.

That being said, buying a home this way can be more complicated, so you need to know exactly what legal steps to take to make sure that your interests are protected.