What Is Preforeclosure?
No one buys a house expecting to default on the loan. As such, many homeowners don’t really know how the foreclosure process works, and what it means to be in preforeclosure.
Preforeclosure is what happens after a person gets behind in mortgage payments, and it includes the grace period that exists before the home is taken back by the bank and auctioned. This is the time for a homeowner to take action to prevent losing their home. Here are the steps in the foreclosure process and where preforeclosure fits in.
The Foreclosure Process
The full foreclosure process starts with late payments and ends with an auction. Here are the three primary things that happen in the process.
Default
This is the technical term for missing mortgage payments. More specifically, default begins when you are at least three payments behind. That is the point where you go into default and the lender tries to contact you.
Default is not a great place to be, but it isn’t foreclosure. This is when lenders have a legal case to start taking more serious action.
Notice of Default
The notice of default is technically a strongly worded letter, but it’s also the harbinger of bad news. It’s the formal beginning of the foreclosure process, and many people would say that preforeclosure starts here. This is how the lender lets you know that they are ready to take legal action.
From here, your best bet at facing and overcoming foreclosure is understanding the lender. What they want most is to be paid for the money they loaned to you. Because of that, a notice of default never has to end with you losing your home. You have plenty of options at this point, but the notice of default begins a timer. For the most part, you have 90 days to make something happen. This 90-day timeframe is the grace period of preforeclosure. If nothing changes during this time, the house will ultimately be lost.
Auction
Auction is the final step in foreclosure. When you get the notice of auction, you have graduated from preforeclosure and are now facing true foreclosure. The bank sent you letters. They gave you a formal notice of default. Even with all of that, no resolution was reached. The grace period is now over.
When the auction begins, you are truly out of options. The bank has repossessed your home, and they will sell it for as much as they can. They never wanted a house out of this deal. They wanted to be paid for the loan. That’s why they will auction the house to get whatever cash they can out of it.
Can Foreclosure Be Stopped?
The most important lesson you can take from learning about preforeclosure is that it is not the end. There are still options available and actions you can take to prevent foreclosure or plan around it.
If you’re serious about stopping foreclosure, you’ll ultimately need money. Sometimes you can renegotiate with your lender, but other times the only way to get enough money is to sell the home. That’s not as scary as it sounds. As long as the home isn’t upside down, you can sell it for enough to completely settle the mortgage and still have money in your pocket — possibly enough for a new down payment.
Sell Your Home to a Cash Buyer
When preforeclosure begins, the clock is ticking. You’ll want fast options, and that’s why you should contact Cash for Vegas Homes. We’ll help you explore your options, and if selling is right, we’ll make you a cash offer on your home. The process is streamlined, so you can beat your deadlines and save your credit and your future. Call us today at 702-850-8001.