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Question About Foreclosure Help

Need a formula about the foreclosure?

Let’s say i have $300,000 downpayment,and borrowed $300,000 from a bank to buy a house.
The loan is 5.6% interest rate,and 30 years-fixed, monthly payment is $1800.(i just make this numbers up)

here’s my question: i made the first two years payments.But at the third year, i can’t pay it, and the house will be in foreclosure. how much i still own the bank?how much the bank pay me after the foreclosure?
( i have a guess,but i am sure it is wrong,so i need your help!

the amount i own the bank : $1800*12*30=$648,000
i pay first two years,so the debt is: $1800*12*28=$604,000

the house sell at $650,000 in the closure,

the amount the bank pay me:
$650,000-$604,000-$6000(other costs)=$ 40,000

it’s strange that i lost $260,000 in two years.
have a nice day!

Industry Expert answers:

The monthly payment has nothing to do with it, nor does the downpayment – directly.

You borrow 300,000 from the bank. After 2 years, your loan balance is around 298,000. You stop making payments so the bank forecloses. After late fees, etc, you would owe around 320,000 (est). The house is usually “sold” back to the bank for the amount owed. In this case the bank “buys” the property back for what you owe $320,000 (est).

Now the bank owns the property. They will then sell the property on the open market for say 520,000 (est). The profit of 200,000 is the banks. NOT YOURS!!!!

You would have lost your downpayment of $300,000 when the bank foreclosed.

In this case, it would make NO SENSE not to sell the property yourself and pay the bank back – before it’s foreclosed.

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