Please help me settle a debate. Here is the scenario:
Say you buy a house for $100,000 and get into a 30 year mortgage with a bank. Over the years, you manage to pay off 70% of the principal (with interest), and thus you have built equity on your home (say 70%). Then disaster strikes and for whatever reason you can't make your monthly payments. You try to sell the house on the market but no luck. For simplicity, you have $30,000 left to pay on your loan.
The bank ends up repossessing your house and auctions it off for $80,000. From the sale money, it keeps the necessary amount to cover your outstanding debt (say $30,000), and any administrative costs it has incurred (say $2,000). The left over money is $48,000.
Now, here is the question: where does this $48,000 go? Does the bank keep it or do you get it (since you built 70% equity)? Does your equity vanish if your house gets repossessed and auctions?
2006-07-24
18:27:40
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9 answers
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asked by
dummy
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Renting & Real Estate