With millions of homes across the country going into foreclosure, it’s important for both buyers and mortgage holders to understand the process. Banks will give you a lot of notice before you actually have to vacate. During that time you may even be able to save your home and renegotiate the terms of your loan. But first, you need to know about pre-foreclosure status and what it means for your ownership of the property. Let’s dig in.
So, What is Pre-Foreclosure in Sacramento, Anyway?
Many homeowners across America, including Sacramento, are facing difficulties making their monthly mortgage payments.
When a homeowner misses 3-6 months of mortgage payments, the lending institution will issue a warning, notifying the homeowner to pay or lose their home. This period is known as “pre-foreclosure.” It’s your first indication that you’re underwater and need to take action.
Banks and mortgage lenders typically provide three months for the homeowner to become current. Of course, this number can vary by bank and situation.
If a homeowner fails to make the necessary payments, the bank will foreclose on the home, assume ownership, and evict the homeowner. To avoid the worst outcome, consider a pre-foreclosure notice a wake-up call to stop ignoring payments and start working with your bank on a way to become current. There may be more options available to you than you realize.
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 you have equity in your home (you owe less than it’s worth), you may be able to refinance your mortgage and have lower monthly payments moving forward. A refinanced loan will usually erase any past due payments, instead rolling them into the new loan. Check with your local Sacramento mortgage broker or complete an online information request from a site like Lending Tree where you could be connected with multiple refinancing offers at once.
- You may be able to quickly sell your home to a reputable real estate investor in Sacramento, like us at California Family Homebuyers, and use the cash pay off the entire loan with some profit left over. In some cases, we *may* be able to work out something with the lender that relieves all or part of your back payments. We can buy your Sacramento California area home quickly — often in just a week or two — will pay in cash, and can take the stress out of trying to find a buyer.
- You can contact the bank and ask them to permit a short sale. 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. In some short sales you may still be required to pay the difference to the bank if the house doesn’t sell for what is owed on the loan. Still, you’ll avoid the credit disaster of a foreclosure.
- You may be able to declare bankruptcy, which can buy you time to pay your debt. Bankruptcy will remain on your credit report for years, and can cause significant damage — but it could free up enough cash to become current since you won’t have credit card and other debt payments to make anymore.
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 dutiful 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 info on this website so we can evaluate your situation to see if we can help.
- We can buy your Sacramento area house – We buy houses in Sacramento and would love to make you an all-cash offer on your house too. 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’ve still got time to fix this situation.
Just connect with 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 or to tap into our free foreclosure foreclosure resources.