There are a number of methods to finance real estate transaction. The most common is a mortgage. This is a loan which transfers an interest in the land as collateral against repayment. The borrower typically pays the mortgage in installments including both interest and principal payments. If the borrower fails to pay, the mortgage’s owner can foreclose on the property. In a foreclosure, the lender can declare that the entire debt is due immediately. If this is not repaid, the lender can sell the property to pay the remainder of the debt.
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Foreclosure procedure depends on state law, the terms of the mortgage, and the existence of any other liens on the property. Many states allow borrowers to make late payments in order to avoid foreclosure, and many lenders also try to work with borrowers. If a foreclosure is threatened, a borrower should consult with an experienced real estate attorney to protect his or her interests and resolve the situation.