What Happens to Equity in a Foreclosure?
Equity is a homeowner’s most valuable asset. Learn what happens to it during foreclosure and how to protect what’s yours.
Haidee
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Home equity is the difference between your home’s value and what you owe. Many assume foreclosure wipes it out, but the outcome depends on the foreclosure process.
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If the sale price exceeds the mortgage balance, you may receive leftover funds after debts and legal fees are paid.
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If the home sells below what’s owed, lenders may pursue a deficiency judgment, requiring you to pay the difference.
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In some cases, state laws limit lender recovery, protecting homeowners from additional debt.
Key takeaway: Protecting equity means acting before foreclosure. Selling your home on your own terms often preserves far more equity than waiting for auction.
