Pre-foreclosure is exactly what it sounds like: it’s when a house is about to go into foreclosure but hasn’t yet. During pre-foreclosure, there’s a lot that homeowners need to know — about their situation, what they can do about it, and what their rights are. Here’s what you need to know about the pre-foreclosure process and what it means for you.
When Does a House Go Into Foreclosure?
A home does not go into foreclosure until mortgage payments are 120 days late. Many banks will let you go beyond this period, however; it’s just the soonest they can actually declare foreclosure. Banks don’t want to foreclose on a property because it’s expensive. To go through the foreclosure process, they need to take control of the property and spend money on lawyers, which cuts into their profits. That’s why they would rather work with a homeowner than foreclose.
What Is Pre-Foreclosure?
Pre-foreclosure is, as mentioned, the time before a home goes into foreclosure. A home can be saved from foreclosure at any point until it has legally changed hands. That means you can pay off your debts and stop the process of foreclosure even if the bank is already planning to sell your home. You just have to accomplish it before the sale goes through.
Pre-foreclosure is a delicate time. No one wants to go through foreclosure. It’s a financially tumultuous process and can seriously damage your credit.
How Can You Stop Foreclosure?
A foreclosure can be halted multiple ways. First, you can declare bankruptcy — not the optimal solution, but it does stall foreclosure while you figure things out. Second, you can sell your home. This is usually the best option, because it prevents you from having to go through the full process of foreclosure, saving you money and time. You may also be able to talk to your bank about getting your loan modified — but by the time you’re in pre-foreclosure, it’s often too late.
What Happens During Pre-Foreclosure?
During this period, the bank will usually take action to sell your home. Some banks have agreements that let the bank put your home on the market directly if you haven’t paid your mortgage. Other banks must initiate the foreclosure process through the courts so a judge can verify the banks have standing. Either way, foreclosure will ultimately end with the property being put up for sale, often for auction. During this process, you can offer to pay back the mortgage loan at any time, but that’s usually a big ask.
How Do You Sell Your Home During Pre-Foreclosure?
The process of selling a home during pre-foreclosure is the same as selling it at any other time. The caveat, however, is that if you’re already in pre-foreclosure, you need to sell your house fast. That’s where a cash home buyer comes in. Cash home buyers are able to purchase a house outright in cash so that you can close within days rather than weeks. You’ll be able to pay off your loan right away with the bank, rather than letting the bank sell your house and deduct legal costs and other associated fees. Selling your home is almost always the best choice because it immediately gets you out of foreclosure and out of a home that you may not be able to afford.
If you’re heading toward (or are already in) pre-foreclosure, it’s already time to get help. Contact Purple Mountain Holdings today online or by phone at (719) 476-2727. We can give you a fair offer for your home so you can sell your property now and stall the process of foreclosure.