Just the word “foreclosure” brings to mind the stress of a precarious financial situation and the threat of losing a home. So what happens when you default on your mortgage payments, and what can you do about it? Read on to learn if you can sell your house in pre-foreclosure and how Integrity RE Solutions can help.
What is Pre-Foreclosure?
Think of pre-foreclosure as the first step in the process of lenders re-possessing your property. It is your last chance to figure out a way to keep up with your mortgage or hold onto your property before it is foreclosed upon. Foreclosure is when you officially lose your home.
Luckily, at this step not all hope is lost! In fact, this stage in the legal proceedings is designed to give you a grace period to figure out what to do with your property–whether it’s sell your home in pre-foreclosure or find a way to continue living there.
How Do You Get to Pre-Foreclosure?
If you turned to lenders in order to help buy a property, you signed a contract agreeing to monthly mortgage payments. The pre-foreclosure process begins when you miss three payments and officially default on your mortgage.
Once the legal proceedings start, you need to figure out whether or not you will sell your house in pre-foreclosure or choose another option to avoid losing your property.
What Happens in Foreclosure?
After three missed payments, you will receive a letter from the lender notifying you of the default. This letter is the last warning before the bank takes legal action, so it’s important to get going on a solution right away! One the legal foreclosure proceedings begin, you can lose your house in anywhere from 3-10 months.
While the lender certainly doesn’t want to see the home go into foreclosure, their main priority is to get the money back that they leant. This means that they will eventually try to sell the house. Typically, if you don’t sell your home in pre-foreclosure, the lender will take over and sell it at something called a “Sheriff’s Sale.”
A Sheriff’s Sale is an auction that is open to the public, and it happens once a property is officially repossessed. This takes place if no payments have been made during the grace period that follows notification of default.
The real issue with foreclosure–other than losing your home, of course–is that it will negatively impact your credit score and hurt your chances of taking out another mortgage in the future. After foreclosure, you may not qualify for loans or credit cards for a few years.
What Can You Do About Pre-Foreclosure?
If you’ve missed three consecutive mortgage payments, it is probably due to a serious life event that changed your financial situation, so the last thing you need is the added pressure of navigating a foreclosure. Luckily, you have a few options in pre-foreclosure before the lender takes over:
- Make Missed Payments. (Since foreclosure is all about missing payments, making those payments that you missed is the most straightforward way to avoid foreclosure. Of course, you likely missed the payments due to an inability to afford them, so this strategy is easier said than done. Sometimes, however, in the midst of a situation like divorce, you may skip payments due to a dispute or distraction, even if you can afford them. In that case, try to make up the missed payments as quickly as possible. Or, if you are able to borrow money from friends or family to tackle the debt, you can avoid having to go through a bank.)
- Apply for a Loan or Refinance. (If your home is in pre-foreclosure, one option is to take out another loan or refinance your home. This is most likely available if you have built equity in your home or the property value has appreciated since your purchase. If this applies to you, it’s best to start the process of refinancing right away, before the foreclosure proceedings pick up.)
- Surrender Ownership. (If you aren’t able to borrow or take out a loan for the amount you owe in mortgage payments, surrendering ownership to the lender is the best way to avoid foreclosure proceedings. Since these can drag on for months and add extra stress, sometimes it’s best just to abandon the property and cede ownership. You’ll sign over the deed to the lenders and then move out of the house.)
- Sell Your House in Pre-Foreclosure. (The quickest way to get rid of the stress of pre-foreclosure is to sell your house. Up until the point that the lender takes over the property to sell it at a Sheriff’s Sale, this option is available to you.)
Can You Sell Your House Before Foreclosure?
Yes, luckily you can sell your house in pre-foreclosure. This is a particularly prudent option if the value of your home has increased since purchase, since you may just get to keep some cash for yourself after you pay off your mortgage.
Call your lender to find out exactly how much you’d owe in a sale, then figure out the value of your home. In order to avoid entering foreclosure proceedings, it’s a good idea to sell your house right away, to a cash buyer if possible.
In a rush to sell your home before foreclosure? Reach out to Integrity RE Solutions today!
What is a Short Sale?
If you don’t think you’ll be able to make your mortgage payments and want to avoid foreclosure, you can talk to your lender about a short sale. A short sale is when you sell your home quickly for less than it’s worth and then ask the lender to forgive your outstanding balance. It’s best to sell without a short sale, since there is no guarantee that your lender will forgive the debt.
When is it Too Late to Sell Your House in Pre-Foreclosure?
Typically, you have 90 days from your last payment before foreclosure proceedings begin. Therefore, if you’ve already missed a payment or two and don’t think you’ll be able to afford the next mortgage bill, it’s a good idea to look into selling your home.
Most lenders would prefer to help you sell the home so they get their money back, rather than selling it themselves at a loss, so keep in touch with the bank about the selling process. You have right up until the time of the lender’s sale (usually a few months after foreclosure) to get the property off your hands.
How Can Integrity RE Solutions Help?
If you’re hoping to sell your Virginia house in pre-foreclosure, Integrity RE Solutions may just be your saving grace. That’s because they come in with cash and buy homes in pre-foreclosure, closing on a purchase in as little as two days.
Using high-tech software, Integrity RE Solutions evaluates your home and finds a price that is fair and accurate. That way you know you are getting the best deal possible! Plus, you can avoid all the fees that come with a conventional sale because Integrity RE Solutions pays cash and covers most of the closing costs. So what are you waiting for?
Want to know more? Fill out the contact form and take the next step towards selling your house in pre-foreclosure.