What Is Pre-foreclosure? How it Works in Real Estate
Pre-foreclosure is considered the first step in the foreclosure process. Pre-foreclosure starts when a homeowner misses monthly mortgage payments. The purpose of pre-foreclosure is to provide homeowners with options to stay in their homes before foreclosure.
Even though pre-foreclosure means that a homeowner is at risk of losing their property, there are certain things that can be done in order to allow a homeowner to keep their home. If you are currently going through pre-foreclosure, here is what you can do in order not to lose your property.
How Pre-foreclosure Works
Pre-foreclosure is the initial stage in the foreclosure process that begins when a homeowner misses mortgage payments. This period offers an opportunity to prevent total loss of property by exploring different solutions. Communication with your lender is crucial as they can provide options such as loan modification or agree to a short sale.
However, the longer this process drags on without a solution, the closer one gets to foreclosure. It’s during this critical time that real estate investors like We Buy Houses Columbus can offer a swift resolution, buying your house for cash, halting the foreclosure process, and saving your credit score from the further negative impact of foreclosure.
Short Sales of Pre-foreclosure Homes
A short sale during the pre-foreclosure period can be an effective solution to avoid foreclosure. This strategy involves selling your property for less than what’s owed on the mortgage, with the lender’s approval.
As counterintuitive as it may seem, lenders often agree to short sales to avoid the costly foreclosure process. Companies like We Buy Houses Columbus specialize in quick, cash purchases, making the short sale process seamless and speedy. Remember, time is of the essence during pre-foreclosure, and a fast sale can be the lifeline that saves your financial future.
Advantages and Disadvantages of Pre-foreclosure Sales
Pre-foreclosure sales come with both pros and cons. On the positive side, they allow homeowners to retain some control over the selling process, potentially salvage their credit score, and relieve the stress of imminent foreclosure. It’s also an opportunity to settle debt without paying additional real estate commissions or making costly repairs, especially when selling to cash buyers like We Buy Houses Columbus.
However, there are drawbacks. These sales can be complex and time-consuming, requiring lender approval. Furthermore, selling your home for less than the owed amount can lead to a deficiency judgment from your lender. Despite these potential pitfalls, a well-handled pre-foreclosure sale can still be a lifeline for many homeowners.
Ask for a Loan Modification
One of the first things you should do is contact your lender and ask for a loan modification. Your lender may agree to refinance or rewrite the terms of your loan. With the help of this option, you will be able to spread your mortgage payments over more years, which makes them more affordable. Usually, lenders agree on loan modifications because they also try to avoid foreclosures.
Consider a Deed in Lieu
Getting a deed in lieu is another way to avoid foreclosure. With a deed in lieu, you voluntarily give your property back to your lender in exchange for total relief on your mortgage debt. Even though it looks like a good option, there are certain consequences that come with it. One of them is the negative impact on your credit score. For this reason, getting a deed in lieu is usually considered a last resort.
Conduct a Short Sale
You can also sell your property during the pre-foreclosure period, which is known as a short sale. If you are in pre-foreclosure, your lender will probably accept a short sale. A short sale is defined as the process of selling a home for less than you owe on the mortgage. One of the main benefits of this option is that it allows you to have control of the pre-foreclosure process. However, there are disadvantages as well, and one of them is that you have to move out of your home immediately after the sale.
Catch Up on Your Missed Payments
The best way to stop pre-foreclosure and prevent foreclosure from happening is to pay off your debt. If you can pay all the late fees and penalties and start making regular payments again, the pre-foreclosure process will stop immediately.
File for Bankruptcy
Filing for bankruptcy is another effective way to stop the pre-foreclosure process. Once you file for bankruptcy, your mortgage foreclosure case will stop immediately, and all other creditors’ actions will be frozen. It is a perfect option that allows you to buy some time that you can use to cure your debts. However, you will still have to pay off your debt in the future.
Sell Your House Fast to a Cash Home Buyer to Stop Pre-foreclosure
This is an option that many homeowners do not know about. If you want to stop pre-foreclosure immediately and sell your home at the same time, selling your property to a cash buyer is exactly what you need. The main benefit of this option is that cash buyers purchase homes immediately and pay cash. In addition, no repairs and renovations are required — cash home buyers purchase homes as is.
If you are looking for a trustworthy real estate investment company to sell your home and stop pre-foreclosure in Columbus or any other nearby area, We Buy Houses Columbus is the company that is ready to help. We purchase all types of properties, regardless of the size, the exact location, and circumstances. Pre-foreclosure is not an issue for us, and we know how to deal with these properties. If you have any questions, or you need information about the company and the selling process, you can always check our website or give us a call.
