It’s a sad fact, but many Americans lose their homes to foreclosure every year. Some lenders aren’t always diligent enough in checking someone’s ability to make repayments, and others don’t really care. And of course, there are situations where a change in circumstances happen, leading to the owner being unable to meet their mortgage payments.
Whatever the cause of a person getting behind on their mortgage payments, the procedure from that point onwards is fairly set. Initially, the lender will file a public default notice. This starts the foreclosure process, and at this point the home officially goes into the pre-foreclosure phase.
So basically, pre-foreclosure is like a grace period. The owner is being warned that they’re in arrears and need to do something about it. At this point, the lender is not able to get the home and sell it to make back their expenses. The length of the grace period varies, as it’s established by state laws. Some states allow the grace period to last for as long as 6 months, but many states have shorter periods.
Once the home enters pre-foreclosure, there are a number of ways the owner can avoid having their home foreclosed on and sold by the lender.
Selling The Home
This is probably the best solution if making the payments is likely to be an continuing problem. By selling the house, the owner should be able to get a reasonable price for it. If the owner waits and lets the lender sell it, the sale price is almost certainly going to be much lower, because the lender just wants to offload the home as quickly as possible.
This is often a great time for a real estate investor to approach the owner with a fair offer to purchase the home. However, many people in pre-foreclosure go into denial, and instead of trying to make the best of a bad situation, will actually avoid taking action until it’s too late. A lot of people also don’t understand the long-term detrimental effect a foreclosure can have on their credit score.
No one wants to face foreclosure on their home, but at least the pre-foreclosure period gives the owner the opportunity to find a solution – such as a Short Sale – that’s a little more favorable for them.
By using a Short Sale, your home is saved from foreclosure, thus helping you to save your credit rating. The lender wins by avoiding timely and costly foreclosure proceedings. And, the buyer of your home wins by getting a solid property at a good market value.
Author: S. A. JohnsonThis author has published 7 articles so far.