Foreclosure and Pre-Foreclosures

Foreclosure and Pre-Foreclosures are something more and more people are having to deal with. With so many homes going into foreclosure it’s a sad site to see. It’s truly breaking records with how many families are struggling right now due to the overall slump in the housing market, as well as difficult economic times in general. As unemployment rises, and it becomes harder for small businesses to stay afloat, more and more homeowners are unable to keep up with their mortgage payments. However, when someone stops making their payments, the bank does not immediately foreclose on the property. What happens first is a period known as pre-foreclosure. If you are a homeowner facing this possibility, this is an important point you should be aware of.

Pre-foreclosure is a kind of grace period between the time you stop making your mortgage payments and the time the lending institution actually seizes your property. The length of this period varies, depending on state laws. In some cases it is 6 months, but in some states it is less. Homeowners in the pre-foreclosure phase still own their homes, but they are under extreme pressure to either pay what they owe or sell their property.

For both investors and homeowners, pre-foreclosure is a good time to sell property. For the investor, it means you can get a very good price, as the owner is desperate to sell. It is often easier to get a good deal during the pre-foreclosure phase than after an actual foreclosure, as at this point there is often more competition. For the homeowner, pre-foreclosure is also a good time to sell, as it may be the only way to avoid foreclosing. Of course, if you are in this situation, you will have to face the virtual certainty that you won’t get the market price of your property. However, selling at a loss is often better than foreclosing.

If you are facing pre-foreclosure, make sure you understand how much time you have before the lender forecloses. Then do everything you can to either negotiate a payment plan with your lender, find a way to resume payments or try to find a buyer for your property. In some cases, it ’s a good idea to seek credit counseling in your area to help you avoid foreclosure.