What happens to your cash down payment during a foreclosure?

Question

If I put 20% cash down on a $500,000 house (and I got laid off and couldn't keep up with the payments) and it foreclosures, what happens to my $100,000 in cash?! Is it gone, and is this way people get 2 mortages (one main and one 2nd for the downpayment)?

Answer 1

It all depends on what the lender is able to get for the house after they foreclose on it and put it on the market. They will assess charges against you for the total unpaid balance, together with accrued interest, plus any expenses they incur in processing the foreclosure, including attorney and other legal fees.

If your $500K house sells for $450K, the lender will retain roughly the $400K needed to retire the mortgage and those other fees. In such cases, I can guarantee you they will find some way or other to find $50K in foreclosure expenses to charge against you.

If your calculator is working you can quickly figure out this will leave you with zero dollars.

Answer 2

If that's the whole story you need to sell this house and try to recoup some of the down payment.

Letting this house go into foreclosure is the worst thing you could let happen. You most certainly lose every penny of equity and will most likely end up owing the bank money after they sell it.

Answer 3

Wow what an theory. Now all we prefer is an absolute dictatorship that could set the fee of each thing to healthful you. that's a much less complicated theory...do no longer purchase a house it is so high priced that your man or woman loan would be greater desirable than 25% of your wages. Now that demands no dictatorship, basically a sprint very own accountability,

Answer 4

Are you that naive? That money is GONE. It went to BUY the house. It's not like a security deposit you get back on an apartment rental.