Foreclosure. It’s a scary word. If you’re facing foreclosure on your home you may be scared, stressed, or overwhelmed by all of the uncertainty that comes with significant financial stress and the possibility of losing something big like your house on someone else’s terms. In this post we’ll answer some common questions you may have about the pre-foreclosure process, and at the end of the post we’ll outline how we can help you come out on the other side of this difficult situation.
What is pre-foreclosure?
Pre-foreclosure is the name for the initial period of the foreclosure process. Foreclosure is what happens when you are unable to make payments on the loan you took out to pay for your house – after a few missed payments, your bank will start the process to take your house back. This process may end in the sale of your home at auction. After a predetermined number of missed payments, your bank will send you a notification, and the pre-foreclosure process will begin.
According to Massachusetts state law, your lender must wait 120 days from the time your account is first delinquent to begin the legal proceedings to pursue a foreclosure. This four month period is meant to give you adequate time to analyze your situation and consider all of your options.
What are your options during a pre-foreclosure?
Although receiving a notice of foreclosure might feel like the end of the world, there are still some things you can do to save the situation and prevent your house from being repossessed by the bank.
One great option is loan modification. Ultimately the bank wants to get the money they are owed, so they may be willing to work with you to adjust the interest rate or other terms of the loan to make it more manageable for you and increase the likelihood that you’ll be able to make the payments. To learn more about this option and to see if you qualify, you should contact your loan provider for more information.
Forbearance is another similar option. In this case, the bank will agree not to go through with the foreclosure and you will have to agree to some kind of payment plan. The reduced payments are only temporary however, and at the end of the predetermined period of time, you’ll be required to pay the remaining debt. Make sure you understand the terms of your agreement as they vary from person to person.
A viable but more risky option is filing for bankruptcy. There are four types of bankruptcy in the state of Massachusetts, and two of them may be applicable to home loan foreclosure situations.
Chapter 7 bankruptcy, or liquidation, is designed for individuals who cannot pay the debts they currently owe. In this situation, a trustee will take possession of your assets (some of your property can be considered exempt from this so make sure you ask questions throughout the process). The bank will then liquidate your assets and use the money that is made from the sales to pay off your remaining debt.
The other type of bankruptcy is Chapter 13 bankruptcy, where individuals who currently have an existing income source can work with their lender to come up with a new debt payment plan that should help you tackle your debt in the next few years.
Sometimes you have the option to buy back the house before the foreclosure goes through and the house goes up for sale at auction. This is known as the “equitable right of redemption“. If your foreclosure is nonjudicial and you are unable to buy your house back prior to the sale, you lose your chance to repurchase the home.
Note: We are not offering you legal advice by sharing these options – these descriptions are meant to be informative and provide you some background information as you navigate this process! If you are considering pursuing these options, you should consult with a lawyer, or a foreclosure attorney.
How does pre-foreclosure affect your ability to sell your home?
One fact that may bring you comfort is the fact that throughout the pre-foreclosure process, you still retain ownership of your home. This means you can still make the decision to sell your home if buying your home back is not a possibility for you.
What are some benefits of selling your home during the pre-foreclosure process?
One of the primary benefits of selling your home prior to foreclosure is the fact that it can be a quick process – you can get a cash payment upfront. This money can be used to pay the lender everything including missed payments and fees, and you can walk away from the situation relatively unscathed. This option also helps minimize the damage to your credit score and credit history.
Contact us today for a free, no obligation consultation to determine the best cash offer for you!
At Pavel Buys Houses, we pride ourselves on the transparency and honesty we hold paramount throughout our entire process. We will provide information for you to ensure that you are making the best possible decision for you and your unique set of circumstances and, if you choose to proceed with our services, we will help make sure the process is painless and stress-free for you!
When you contact us, we will be able to help you through our efficient and productive process. First, we will get to know you and your situation. You can tell us about your current set of circumstances and about the present condition of your home, and when we gain that information we can produce an accurate and fair cash offer for you.
At Pavel Buys Houses, we buy homes in Massachusetts and even in some parts of New Hampshire. We are a local company, and we aim to support the local communities we work in. We are also a Better Business Bureau accredited cash home buying company, with an A+ rating. Contact us today for a free consultation to receive your no-obligation cash offer. You can fill out the form on the website, or for faster service call us at 781-309-7085.