Missing a few monthly mortgage payments is a predicament that can befall almost any homeowner. Late payments often accompany unforeseen life events, such as divorce or the death of the household breadwinner. Broader home loan defaults also tend to materialize in unfavorable economic conditions.
When you stop making payments on your mortgage, your loan servicer may initiate the preforeclosure process, which could ultimately lead to foreclosure. However, with appropriate and prompt action, homeowners facing preforeclosure can avoid losing their home.
What is preforeclosure?
Preforeclosure is the first step in the foreclosure process, and usually begins when a homeowner is 90 days past-due on their mortgage. At this point, the loan servicer may issue the homeowner a notice of default indicating that they are pursuing legal measures — initiating a foreclosure — to collect the unpaid debt.
With millions of homes across the country going into foreclosure, it’s important for both buyers and mortgage holders to understand the process.
Pre-foreclosure refers to the first phase of a legal proceeding that ultimately can conclude in a property being repossessed from a defaulted borrower. The lender files a notice of default on the property in pre-foreclosure because the borrowing owner exceeds the contractual terms for delinquent payments.
So what is a pre-foreclosure in CARLISLE anyway?
Many homeowners across America and CARLISLE are facing difficulties making their monthly mortgage payments.
When a homeowner misses 3-6 months of mortgage payments, the lending institution will issue a warning, notifying the homeowner to pay or lose their home. This period is known as “pre-foreclosure.”
Banks and mortgage lenders typically provide three months for the homeowner to become current. Of course this number can vary by bank and situation sometimes.
If a homeowner fails to make the necessary payments, the bank will foreclose on the home, assuming ownership, and evict the homeowner. Thankfully, during this stage of the foreclosure process, a mortgage holder has the opportunity to take advantage of several options to prevent losing their home.
Pre-foreclosure Options for Borrowers
If you’re behind on mortgage payments, you’re likely to receive a “notice of default” from your mortgage lender.
This document will state that you have not made mortgage payments for the last 90-180 days. It’s important not to panic.
You have options that can delay or even prevent losing your home:
- If your mortgage is “above water,” (meaning you have equity in your house) you may be able to refinance your mortgage, receiving lower monthly payments. Check with your local CARLISLE mortgage broker… or contact us and we can connect you with a reputable one.
- You may be able to quickly sell your home to a real estate investor that’s reputable in CARLISLE like us at Rae Buys Houses, using the cash acquired to pay the months of back-payments owed (or we *may* be able to work out something with the lender that relieves all or part of your back payments.We can buy your CARLISLE OH area home quickly, often in just a week or two, will pay in cash, and takes the stress out of trying to find a buyer.
- You can contact the bank and ask them to permit a short sale. In a short sale, you’ll sell your home for less than it’s worth, and the bank will take the loss as a tax write-off. In some short sales you may still be required to pay the difference to the bank if the house doesn’t sell for what is owed on the loan.
- You may be able to declare bankruptcy, which can buy you time to pay your debt. Bankruptcy will remain on your credit report for years, and can cause significant damage.
Lenders are very much aware of the widespread financial troubles across the country and they’re willing to work with borrowers a lot of the time.
If you’re honest and communicate with your lender, you’ll often find that there are options that will allow you to remain in your home, or at least salvage your credit rating.
A foreclosure can often negatively affect your credit score by 200-400 points and can prevent you from obtaining a loan of any sort for 5-7 years, so be very dutiful if you’ve received a Notice of Default from your lender.
Even though the result is similar to a foreclosure in that the homeowner loses their home, a short sale is not as damaging to credit, so it may be a better route.
Keep in mind that because borrowers in preforeclosure have already skipped payments, your options may still be somewhat limited. It is highly unlikely, for instance, that you would be able to refinance your mortgage, which typically requires you to be current on your payments.
It is possible, though, that you could consider offers to buy the home, say from an investor, during the preforeclosure period. If you were to find a buyer and have positive equity in your home, you may be able to sell it and pay the loan back with the proceeds to avoid foreclosure.
But if you’re not able to find a solution with your lender working directly with them… connect with us. We may be able to help.
Ways We Can Help If You’re In Pre-Foreclosure
- We can potentially help with a short sale – Submit your info on this website so we can evaluate your situation to see if we can help.
- We can buy your CARLISLE area house – We buy houses in CARLISLE and would love to make you an all-cash offer on your house too. Just fill out the form here to get started >>
- You can ask us questions and we can provide you FREE guidance and resources so you can make a well educated decision. This costs you nothing, there’s absolutely no pressure, no obligation… just free guidance without a catch.
If you’re in the pre-foreclosure stage… you’ve still got time to fix this situation.
Just connect with your bank to see if they’re willing to work with you… or contact us if you’d like to see what we can buy your house for or to tap into our free foreclosure foreclosure resources.