What is Pre-Forclosure?
Defining Pre-Foreclosure
If you’ve failed to pay your mortgage for three months, your mortgage lender will send you a notice saying that you have violated the terms of the mortgage. This is how pre-foreclosure begins. It is the first step in the foreclosure process, and it means that a homeowner is at risk of losing their property if they do not take action.
It is important to know that the pre-foreclosure process has a negative impact on your credit score. Credit scores are based on both current and late payments. That means that if you have reached pre-foreclosure by not paying your mortgage for a few months, your mortgage lender has recorded the failure to pay and reported it to the credit-reporting agencies. As a result, future lenders will see that you were late with your payments and may not want to give you a loan.
How to Get Out of Pre-Foreclosure
If you know that you will not be able to pay your mortgage debt promptly, there are several actions you can take to get out of a pre-foreclosure situation and stop the foreclosure process.
Loan modification
Loan modification can be a great option for saving your property from being foreclosed on. If you are struggling to make monthly payments, you can talk to your mortgage lender and discuss possible solutions to remedy the situation. You will need to explain why you’re having difficulty paying the mortgage. You can ask your lender to either reduce monthly payments and extend the length of your loan or reduce the interest rate. In some cases, lenders will agree to work with you rather than proceed through the foreclosure process.
Deed in lieu
If a loan modification is not an option for you, then you can try deed in lieu. This means the homeowner deeds the property back to the lender. Both you and the lender must enter into an agreement in good faith and completely voluntarily.
Refinancing
Refinancing is the process of getting a new mortgage by changing the terms of the one you currently have. Whether or not refinancing is a good option to stop the foreclosure process depends on the type of loan you have and the current status of your mortgage. It is a good option for reducing the monthly payment but can result in new closing costs. Your chances of refinancing are higher if your current mortgage loan is in good standing.
Short sale
Short sale is the term used when a house is sold for a price that is less than the amount owed on the mortgage. In order to negotiate a short sale, you will have to talk to your mortgage lender. Only after the lender agrees on it can you start looking for a real estate agent, who will help you find a buyer. Usually, short sales are attractive to lenders because homeowners do the hard work of trying to find a buyer. Once the buyer is found, the pre-foreclosure process will end. However, you may still be liable for the difference between the sale price and the mortgage.
Selling a home to a cash buyer
The fastest and easiest way to get out of pre-foreclosure may be to sell your property to a real estate investment company. By selling your house for cash, you do not have to prepare your property for the sale and look for a real estate agent. All you need to do is to let an investor have a look at your property and give you a cash offer that you can either accept or decline. If you accept it, your house will be sold to an investor immediately, and you will receive cash to pay for your mortgage, and prevent foreclosure.
Work with We Buy Salt Lake City Houses to sell your property fast
If your property is located in Salt Lake City and you need to sell it fast in order to avoid foreclosure, contact us. At We Buy Salt Lake City Houses, we are ready to buy your home immediately and as is. We will make the sale process as easy and straightforward for you as possible. All you need to do is fill out the form on our website or give us a call for more information.