What is Pre-Foreclosure?

Foreclosure - What is Pre-Foreclosure?

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It's a sad fact, but many Americans lose their homes to foreclosure every year. Some lenders aren't all the time diligent enough in checking a person's quality to make repayments, and others don't undoubtedly care anyway. And of course there are situations where a turn in circumstances happens, leading to the homeowners being unable to meet their mortgage obligations.

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Foreclosure

Whatever the cause of a person getting behind on their mortgage payments, the process from that point onwards is fairly set. Initially, the lender will file a public default notice. This initiates the foreclosure process, and at this point the property officially enters the pre-foreclosure stage.

So basically, pre-foreclosure is like a grace period. The homeowner is being warned that they're in default and need to do something about it, but at this point, the lender is unable to claim back the property and sell it to recoup their costs. The length of the grace duration varies, as it's carefully by state laws. Some states allow the grace duration to last for as long as 6 months, but many states have shorter periods.

Once the property enters pre-foreclosure, there are a estimate of ways the homeowner can avoid having their property foreclosed on and sold by the lender.

Pay Off The Default

If the homeowner can find the money t pay off the default amount, then the property is removed from pre-foreclosure. If the estimate in default is small, and the default was caused by a temporary glitch in circumstances, then it may be worthwhile taking out a personal loan to repay the debt. If the question is ongoing, however, this may just cause more problems for the homeowner.

Sell The House

This is a tiny more drastic, but is probably the best solution if meeting the repayments is likely to be an ongoing problem. By selling the house, the homeowner should be able to get a inexpensive price for it. If the homeowner waits and lets the lender sell it, the sale price is approximately undoubtedly going to be much lower, because the lender just wants to offload the property as fast as possible.

This is often a good time for an investor to advent the homeowner with a fair offer to purchase the property. However, many people in pre-foreclosure go into denial, and instead of trying to make the best of a bad situation, will undoubtedly avoid taking operation until it's too late. Many also don't understand the long-term detrimental result a foreclosure listing will have on their reputation score.

Nobody wants to face foreclosure on their home, but at least the pre-foreclosure duration gives the homeowner the chance to find a solution that's a tiny more suitable for them. Waiting for the property to pass into foreclosure and be seized by the lender is approximately never the best option.

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