If your home has entered pre-foreclosure, then it's due to missed mortgage payments. Typically, this has been going on for months, signaling to the banks that you don't have the funds necessary to make the monthly mortgage payments. Pre-foreclosure is the state in which the banks have declared that they are taking back your home and are going to foreclose. If no payments are made, or you haven't made any steps to work with the lenders, there's a chance that you may be evicted, and your home put on auction after a full foreclosure. There are, of course, multiple ways in which you can stop this process, or get out of the foreclosure process entirely. We'll cover a few of them below.
1. Pay the Loan – If you're able to come up with the money, you can pay off the past-due balance along with the late fees and penalties. Most lenders will stop the pre-foreclosure process once the balance is leveled again, and you begin making payments regularly. You can either pay in a lump sum or create a payment plan to pay in chunks until you're caught up. Just remember that your original payments on your mortgage still apply, even with that extra payment plan.
2. Loan Modification – Ask your lender to change your existing mortgage payment to a more affordable one. This generally will extend the length of your loan and add your missed payments onto the balance, but the monthly cost will be more affordable overall.
3. Refinance – You can always refinance your home. This will change the payment and length of the loan. You may not always get a lower interest rate, but a lower payment (and longer loan) are pretty much guaranteed. Generally, though, your lender will expect you to pay off the past-due balance, which will usually affect the refinancing amount and process.
4. File for Bankruptcy – Filing for bankruptcy will stop the collection process on your past-due balance. Your lender may allow you to live in your home while a new mortgage plan is worked out for the past-due balance. However, there may be a case where the foreclosure goes through even with the declaration of bankruptcy, depending on how you file for it. You'll need to speak with a professional about how to file for bankruptcy in the best way for your situation.
5. Sell Your Home – This is probably the best option of the bunch, as it will get you out of a situation where you cannot pay for your home. You can sell your home as a short-sale or for the balance of your loan. A short-sale will allow you to sell your home for less than the loan balance but needs to go through the banks' approval to do so. If you sell your home for the loan balance, you won't be getting any money out of the sell, but you won't be losing any money either by having to pay the difference out of pocket.
Here in Tucson and Southern Arizona, we here at Corner Connect, are very willing to buy your home in pre-foreclosure. We've been buying homes for over a decade and have bought and sold over 3000 homes in our time. We buy homes for cash, with some of the highest prices you'll find, and our approach is straight-forward and hassle free. No matter the reason for you needing to sell your home, we're here to help you do so.
So, if you're looking to sell your home due to pre-foreclosure, feel free to contact us. We'll help you get the best price possible and get you out of the way of the collectors.