You’ve likely heard the term pre-foreclosure floating around. With home values lagging and homeowners struggling, foreclosures are becoming more and more rampant around the country. Just what is pre-foreclosure in Massachusetts? Check out the details below.
The Definition of Pre-Foreclosure
The pre-foreclosure process is the start of the official foreclosure process. It doesn’t begin until you’ve missed between three and six months of mortgage payments. Each bank differs when they start the process.
You’ll receive notices of missing payments by mail and phone prior to the start of the process. Once you are late enough, the bank will send a ‘Notice of Default.’ This is the official notice that you are behind enough on your payments for the foreclosure procedures to begin.
This letter does not mean you have to vacate your home – it’s a warning of sorts that the process will start soon. When you receive the pre-foreclosure in Massachusetts letter, you have 3 months or more to rectify the situation. Each bank differs, but by law, they must provide at least three months.
It’s important to understand your options during this time. If you don’t use them, expect the official foreclosure process to begin.
Stopping a Pre-Foreclosure in Massachusetts
Receiving the ‘Notice of Default’ is like a warning for you. If you use it appropriately, you can stop the process and never get tangled up in the foreclosure proceedings. What you do next is very important, though. Most importantly, don’t ignore your lender. If you are struggling, let them know. They may have more options for you than you realize.
Most commonly, banks offer:
- Refinance options – If you have decent credit, still have income and have some equity in your home, you may be able to refinance the loan. Anyone can refinance their loan as long as they qualify. You should stick with your current lender as a new lender won’t like your payment history. Your current lender, however, will want to avoid the foreclosure process as much as they can. Foreclosure for banks is expensive and time-consuming – in reality, they don’t want your home. They want you to make your mortgage payments. If they can refinance your loan and make it more affordable for you, they may.
- Restructure your loan – If you are underwater, meaning you owe more than the home’s worth, you may be able to restructure your loan. There are federal, state, and private bank programs that help homeowners in this situation. Talk with your lender and exhaust all of your options. You may not even realize they have a way to extend your term, lower your interest rate, or offer forbearance which stops your payments for a temporary period while you get caught up financially.
- Short sale – If you just want to get out of your home but don’t want a foreclosure on your credit, ask your lender about the possibility of selling your home for less than what you owe. Unlike a standard sale, you’ll have to work with your lender throughout the process, getting their approval to accept a bid. In exchange, though, the lender will consider your debt paid in full even though you paid less than the full amount. Your credit will be hit with a short sale, but the effects are typically less detrimental than a foreclosure.
- Sell to a cash buyer – If you want to sell your house fast and get out of it, stopping the pre-foreclosure in Massachusetts process, you may sell it to a cash buyer. Find a reputable company that offers fair values for your home, though, don’t get desperate and sell it to just anyone. You’ll receive cash in as little as 7 – 10 days, allowing you to pay off the mortgage and start fresh.
Don’t be embarrassed about your situation – millions of homeowners have gone through it or are going through it right now too. The most important thing to do is to take care of the situation. Evaluate your options and see which will cost the least amount of damage to your credit score and finances in the long run. A pre-foreclosure in Massachusetts isn’t the end of the world, but it is a sign that you need to act fast to prevent a worse outcome.
At PavelBuysHouses.com, we can help you stop foreclosure fast and work with you to find a solution to solve your problem. Get in touch with us today using our contact form or call/text us at 781-309-7085.