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Pre-Foreclosure: What Are Your Options?
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DISCLAIMER: This article is meant for educational purposes only and is not intended to be construed as financial, tax, or legal advice. Crown City Home Buyers always encourages you to reach out to an advisor regarding your own situation.
The Pre-Foreclosure Process
Receiving that ominous letter in the mail that you are in breach of your loan can be scary, but Crown City Homes is here to help you navigate the pre-foreclosure process. Pre-Foreclosure is the first step in the foreclosure process and is meant to provide homeowners options to stay in their homes before a foreclosure. Pre-Foreclosure occurs when mortgage payments are missed, triggering lenders to issue a notice of default. This notice means the lender has begun a foreclosure proceeding.
Pre-foreclosure begins when a homeowner misses a monthly payment. When 3 months of payments are missed, the borrower is now in default of their mortgage. This is the beginning of the foreclosure process.
When you miss a payment, the best thing to do is to contact your mortgage servicer. In most cases, lenders are willing to work with homeowners if they are notified shortly after the problem arises.
Lenders want to avoid legal fees, since attorneys are expensive. Most lenders are willing to help borrowers devise a plan, that could include a loan modification, that works for both parties. It’s essential to maintain open communication with your lender during this time.
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The Foreclosure Process
Notice of Default: this is generally sent after 3 months of missed payments. It is a written notification to the homeowner that the lender will pursue legal action if the loan is not paid.
The foreclosure process has now begun and can take anywhere from 3-10 months. As a homeowner, it is important to act ASAP to avoid losing your home.
The lender’s goal is to get the money they are owed so if the borrower continues to miss payments and isn’t communicating with the lender, a foreclosure will likely be initiated.
The property will go to auction in order for the lender to recoup what it can on the loan. A minimum bid of the amount owed will begin the auction and the home is sold to the highest bidder. If the house is sold at auction, you will be required to vacate the property.
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My House Is In Pre-Foreclosure
What Are My Options?
There are options available for people who find themselves in pre-foreclosure. Whatever option you might consider, it is important that you communicate with your lender. They want to avoid legal fees and are usually willing to work with people who are open and honest about their situation.
Loan Modification:
If you have equity in your home or your home has appreciated significantly since purchase, your best bet might be to refinance. This is obviously dependent on interest rates and other closing fees, but it’s another reason why speaking to your lender is important.
If you have limited equity or are further along the foreclosure path, a loan modification might be an option. The loan is modified to extend the life of your loan by spreading out payments over more years, giving you more affordable payments.
Deed In Lieu of Foreclosure:
Surrendering ownership rights to the lender via this documentation is another way to avoid foreclosure. The deed is signed and you vacate the property. The lender is then free to sell the property and recoup as much as they can. Lenders can legally have the right to still seek reimbursement for any losses on the sale from the homeowners. Ask about lender policies before signing away your house.
This option could be appealing to people with limited equity who want to avoid foreclosure and a big hit to their credit.
Short Sale:
You can sell your house during pre-foreclosure as most lenders will accept a short sale. A short sale means that a buyer pays less than the balance of the mortgage and is contingent on lender approval. Lenders will agree to this because it saves them the time and expense of the foreclosure proceeding.
Borrow To Catch Up:
The best way to get out of pre-foreclosure is to catch up on all payments. Asking for help from friends and relatives might be uncomfortable, but most lenders will stop the pre-foreclosure process once the mortgage is brought current. Bringing the loan current before the foreclosure process will also reduce the damage to your credit.
No matter your situation, we have the resources to buy your home and help you sell your house fast in Kansas City! We buy houses in any condition or price range for cash. We make it easy to sell your house fast, and you don’t have to worry about making repairs.
We buy houses in Kansas City that are in any condition.
Any Reason
- Inherited Properties
- Relocation
- Upgrading
- Downsizing
- Foreclosure
- Major Repairs Needed
- Divorce
- Bankruptcy
- Health Issues
Any Condition
- Old, Outdated Houses
- New Houses
- Storm Damage
- Fire Damage
- Termite Damage
- Full of Stuff or Trash
- Major Repairs Needed
- Problem Tenants
- Unfinished Construction
Any Challenge
- Financial Issues
- Title Issues
- Code Violations
- Hoarder Home
- Low Equity
- Large Liens
- Out of Area Property
- Family Matters
- Late on Mortgage Payment
Next Step: How Can Crown City Home Buyers Help?
Homeowners who find themselves in as daunting a situation as pre-foreclosure still have several options. Crown City Home Buyers is not just a home buying company, we are a real estate consultant who has helped many people in Kansas City navigate the pre-foreclosure process. Our goal is to help you explore every option to keep your house. If that isn’t a possible outcome, we can help you find a way to maximize your value on the sale of your house.
If you’d like to start the conversation, fill out the form below or give us a call to speak to one of our property specialists.
Get A Fair Cash Offer On Your House
We here at Crown City Home Buyers are dedicated to getting the most cash possible into your pockets for your home as-is, so that you can get the most out of this situation and prepare to move on. We will buy houses in any condition without you needing to fix your home before sale.