As a homeowner regardless of your financial health, it’s important to understand what a pre-foreclosure is.
No one knows the future, and your financial situation can change overnight. So, if you are not facing foreclosure great. However, as a homeowner, it’s important that you understand what a pre-foreclosure is.
So what is a pre-foreclosure in Houston anyway?
Many homeowners across America and Houston are facing difficulties in making their monthly mortgage payments.
When a homeowner misses 3-6 months of mortgage payments, the lending institution will issue a warning or a notice of default notifying the homeowner to pay or run the risk of losing their home. This period is known as “pre-foreclosure.”
Banks and mortgage lenders typically provide three months for the homeowner to become current. The time allotted to the homeowner varies by lender.
If a homeowner fails to make the necessary payments, the bank will foreclose on the home, assuming ownership, and evict the homeowner. At the end of the foreclosure process, a public auction or trustee sale is arranged.
Thankfully, during this stage of the foreclosure process, a mortgage holder has the opportunity to take advantage of several options to prevent losing their home.
A home that is being sold during pre-foreclosure can be a win-win situation for all parties involved. The homeowner can sell the home and avoid damage to their credit. A cash buyer like Sell Your Homes Houston can get a property below market value. The lender is also able to transfer the mortgage to the buyer and avoid the cost of going through foreclosure.
Pre-foreclosure Options for Borrowers
If you’re behind on mortgage payments, you’re likely to receive a “Notice of Default” from your mortgage lender.
This document will state that you have not made mortgage payments for the last 90-180 days. It’s important not to panic.
You have options that can delay or even prevent losing your home:
- If your mortgage is “above water,” (meaning you have equity in your house) you may be able to refinance your mortgage, receiving lower monthly payments. Check with your local Houston mortgage broker or contact us and we can connect you with a reputable one. Currently, mortgage loan interest rates are some of the lowest we have had in history. So, it’s a great time to refinance.
- You may be able to quickly sell your home to a real estate investor that’s reputable in Houston like us at Sell Your Homes Houston , using the cash acquired to pay the months of back-payments owed (or we *may* be able to work out something with the lender that relieves all or part of your back payments. We can buy your Houston TX area home quickly, often in just a week or two, will pay in cash, and takes the stress out of trying to find a buyer.
- You can contact your lender and ask about short sale options. In a short sale, you’ll sell your home for less than it’s worth, and the bank will take the loss as a tax write-off. The buyer of the property is a third party, (not the bank) and all proceeds from the sale go to the bank. In some short sales, you may still be required to pay the difference to the bank if the house doesn’t sell for the balance of the loan.
- You may be able to declare bankruptcy, but you’ll have to give up your home. Why? Your lender’s right to foreclose doesn’t go away when you file for bankruptcy. If you want to keep your home you must continue to make mortgage payments. Keep in mind that bankruptcy will remain on your credit report for years and can cause significant damage.
Lenders are very much aware of the widespread financial troubles across the country. It’s more advantageous for lenders to work with you and help to resolve your problems. They are in the business of making money not taking homes.
If you’re honest and communicate with your lender, you’ll often find that there are options that will allow you to remain in your home, or at least salvage your credit rating.
A foreclosure can often negatively affect your credit score by 200-400 points and can prevent you from obtaining a loan of any sort for 5-7 years, so be very conscientious if you’ve received a Notice of Default from your lender.
But if you’re not able to find a solution with your lender working directly with them, connect with us. We may be able to help.
Ways We Can Help If You’re In Pre-Foreclosure
- We can potentially help with a short sale – Submit your information on this website so we can evaluate your situation to see if we can help.
- We can buy your Houston area house – We buy houses in Houston and would love to make you an all-cash offer on your house today! Just fill out the form here to get started.
- You can ask us questions and we can provide you FREE guidance and resources so you can make a well-educated decision. This costs you nothing, there’s absolutely no pressure, no obligation, just free guidance without a catch.
If you’re in the pre-foreclosure stage you have time to be proactive and find a solution that works for you.
Contact your bank to see if they’re willing to work with you or contact us if you’d like to see what we can buy your house for.