What is Preforeclosure?
If you haven’t been paying your mortgage, you’re likely in preforeclosure now. Banks can start the foreclosure process within 120 days of you being late on your mortgage payments. If that happens, you need to act quickly to resolve the situation.
What Happens During Preforeclosure?
During preforeclosure, the bank is taking steps to push toward foreclosure.
First, your credit score is likely to go down significantly because you’re no longer paying your debts. The lower your credit score, the harder it is to get future credit accounts and loans. And if you end up actually foreclosing, your credit score will go down even more. The long-term effects can seriously affect your financial future.
The bank is going to be taking action to collect. You’ll likely get a lot of calls or even have bill collectors show up at your door.
Eventually, the bank will post a foreclosure notice on your door, and you will have a set amount of time until you must move out of your home.
When Does the Foreclosure Occur?
How and when foreclosure will occur depends on your agreement with your mortgage provider.
Some mortgage companies include a clause in original loan paperwork that lets them sell your house to someone else if you are in foreclosure. They can put your home up for auction, and if someone buys it, then that person owns it. This process is a way for them to avoid having to go to court for a foreclosure order.
If there’s no clause in the paperwork, the mortgage company will need to go to court and get an order of foreclosure. You will still be able to recover your home until the moment it’s actually been sold. But once your property has been sold, you’ll have to repurchase it if you want to recover it, and there’s no guarantee of being able to do so.
Being in preforeclosure is a dangerous time. Not only is your credit score affected, but you need to act fast. You should try to avoid foreclosure as much as you can.
How Can You Avoid Foreclosure?
You still have options if you’re in preforeclosure. The worst thing you can do is just let it happen. Many people become hesitant when a foreclosure is imminent because they aren’t sure what to do. But communicating with your bank and looking at alternatives is exactly what you need to do if you don’t want the situation to get any worse.
- Talk to your bank. If you haven’t been late with your mortgage before, it’s possible they can restructure your loan so that you aren’t late anymore. This just makes the loan term longer and puts the payments you’ve missed so far at the end of it.
- Ask for a short sale. A short sale is when you ask to sell your house for less than you owe. You’ll be able to walk away from the amount that you owe, though you may need to pay taxes on it.
- Go into bankruptcy. This is a desperate action, but it can make sense for those who are already behind in other payments. Bankruptcy means that you’re going to wipe out many of your debts, but this will have a lasting impact on your financial situation.
- Pay off the debt. Of course, there is the possibility of paying off debts, sometimes by taking out other consolidation loans. But usually, if this was an option at all, the situation wouldn’t have gotten to preforeclosure.
- Sell your home. Of the options, this is always the best. If you can sell your home before the process of foreclosure finishes, you’ll be able to dodge the foreclosure entirely and possibly make money from the sale.
Don’t let foreclosure happen to you. You can sell your property fast for cash, pay the mortgage off, and step away with your credit unscathed. If you want a no-obligation quote, we can help. Contact us online at We Buy Killeen Houses today to find out more.