“What is pre-foreclosure?” is one of the most common questions people ask when they are struggling to make mortgage payments. Today, home foreclosure is a serious term used when a lender (usually the bank) comes calling for the property.
When the loan to purchase the property is overdue, and the homeowner has failed to make monthly installments for at least three months notice of default is issued. With a default notice, a real estate agent or team member will deliver the default notice on the property to communicate to the tenant that the pre-foreclosure process started.
After the homeowner receives the notice, it lets the lender continue the foreclosure process unless the debt is immediately, or very promptly paid in full. While it can be startling to receive a pre-foreclosure notice, a default notice is never a surprise. In fact, homeowners already know long before the default notice is delivered that the foreclosure process has begun.
What Does Pre-Foreclosure Mean to Me?
Typically, a person who falls behind two to three months on an active home mortgage will cause the lender to issue a notice on the property. This is how the process begins, however, not every foreclosure is the same. In every case, the process starts with a default notice but in your case, the pre-foreclosure period may vary depending on your mortgage lender, how they notify you, and their foreclosure plan for your home.
Can I Sell My Home During Foreclosure?
Also known as a short-sale, a home on the market in pre-foreclosure may be a way to satisfy your outstanding mortgage payments. If you are unable to work out a payment plan for the outstanding balance along with the next payment, a short-sale of your home can also happen quickly.
Other options may include loan modifications that can be applied immediately and to the long-term payment of your mortgage.
Negotiating a short-sale may also require that you talk to your lender alone or with the help of a qualified realtor to satisfy a default notice. And remember, while every short-sale is not a foreclosure, many times a bank will be happy to see that the homeowner has listed the home for sale during the pre-foreclosure process.
A pre-foreclosure property may also be appealing to homebuyers for a variety of reasons including a low price. If you are able to sell the home fast, outstanding mortgage bills are easily paid and the stress of foreclosure is off.
How Does Pre-Foreclosure Affect My Credit?
You may wonder if your credit score is going to suffer due to a foreclosure on your home. It may, however, if the payments are current or late, it will not matter during the foreclosure process.
If you have reached the pre-foreclosure stage, your mortgage lender or bank has already reported the lateness of your payments to the credit agencies. For this reason and many others, it is important to always keep your mortgage payments current. Your credit reports will be able to take a small hit, but when the bank initiates the pre-foreclosure process, your credit score will immediately drop.
Talk to real estate professionals at the office of Jeff Barchi about your mortgage, payment options, and plans for your home foreclosure if you are already going through the process. The team is ready to help prevent pre-foreclosure worsening in the case that you still owe money on your mortgage.
Call Jeff Barchi today, and find out the answers to your questions about home foreclosure. If you have recently received a notice of default, do not wait to talk to someone about making up the payments or taking action on the pre-foreclosure of your home.