Did you know that the average house in the United States now costs over $350,000? As you might guess, this has served as an obstacle for those who are looking to purchase their first home.
Unfortunately, it’s not uncommon for homes to enter foreclosure. It’s essential that you understand the facts and myths associated with this so that you can take the appropriate course of action.
Let’s take a look at everything you need to know about pre foreclosure homes (and the common myths surrounding them).
What Exactly Is Foreclosure?
When a homeowner can no longer make their mortgage payments, the lender may begin the foreclosure process.
Once the process begins, it can move very quickly — meaning the homeowner may have very little time to take action. There are three stages of foreclosure:
- Pre foreclosure
- Auction
- Bank ownership
Each stage will have different options available to the homeowner, so it’s important that you understand where in the process your home is.
Pre Foreclosure
This is the stage where the homeowner has missed one or more mortgage payments and is in danger of foreclosure. The lender will typically send a notice to the homeowner informing them that they are in default and have a certain amount of time to catch up on their payments.
If the homeowner is unable to make the payments, the home will go into foreclosure.
Auction
At this stage, the home will be put up for auction.
Homeowners will be given a certain amount of time to pay the delinquent amount plus any other fees associated with the foreclosure process. If they are unable to do so, the home will be sold at auction.
Bank Ownership
If the home isn’t sold at auction, it will go into bank ownership. The bank may then choose to sell the home as a foreclosure or list it on the open market. Their decision will depend on multiple factors, such as the current state of the local real estate market.
What Are the Myths Surrounding Pre Foreclosure Homes?
Let’s take a look at some of the myths surrounding pre foreclosure homes. This will help you navigate this situation if it ever arises.
Listed below are the most notable.
Myth 1: The Homeowner Will Be Evicted Immediately
This is one of the biggest myths surrounding foreclosures.
In reality, the process can take months (or even years) to play out. In many cases, the homeowner will not be evicted until the very end of the process.
This means that homeowners have time to take action before they lose control of their property.
Myth 2: The Home Will Be Sold at a Major Discount
This is another common myth. In reality, the home may only be discounted by a few percent.
The home may even sell for more than its original value. This is especially true for homes that were purchased decades ago or homes that are now in highly developed areas.
Myth 3: You Can’t Buy a Pre Foreclosure Home if You Have Bad Credit
This is simply not true. You may be able to qualify for a loan if you have bad credit. However, the terms of the loan may not be as favorable as they would be with good credit.
Myth 4: The Process Is Too Complicated to Bother With
Interestingly, the process can be quite simple if you work with an experienced professional.
This means that there’s no reason to avoid pre foreclosure homes if you’re interested in purchasing one. Similarly, you can also manage pre foreclosure if you’re dealing with this process for a property you own.
What Are the Primary Causes of Foreclosure?
There are a number of different factors that can lead to foreclosure.
The most common include:
- Job loss
- Divorce
- Illness
- Death
- Military deployment
- Underemployment
Of course, this is not an exhaustive list. There are other factors that can lead to foreclosure as well. Sudden relocation, for example, could eventually lead to foreclosure.
What Are the Effects of Foreclosure?
Foreclosure can have a number of negative effects on your life.
These include:
- Damage to your credit score
- Difficulty renting or purchasing a home in the future
- Emotional stress
- Strained relationships
So, it’s in your best interest to avoid this situation altogether if possible.
Is It Possible to Stop Foreclosure if You Enter Pre Foreclosure?
Yes, it is possible to stop foreclosure if you enter pre foreclosure.
However, you’ll need to take action quickly. The sooner you take action, the better your chances of avoiding foreclosure altogether.
In context, this means that you should consider the following:
Contact Your Lender
You should contact your lender as soon as you realize that you’re in danger of foreclosure. This will allow you to explain your situation and negotiate a payment plan.
Remember, your goal should be to avoid foreclosure altogether.
Sell the Property
Another option is to sell the property. This will allow you to pay off the mortgage and avoid foreclosure. You may even be able to sell the property for a profit.
Of course, you’ll need to act quickly in order to do this.
File For Bankruptcy
If all else fails, you can always file for bankruptcy. This will stop the foreclosure process and give you some time to get back on your feet. However, it’s important to understand that bankruptcy will have a negative effect on your credit score.
These are just a few of the options that are available to you if you enter pre foreclosure. As you can see, there are ways to avoid foreclosure altogether.
It’s just a matter of taking action and exploring your options.
Avoiding Foreclosure
If you’re worried about entering pre foreclosure, there are a few things that you can do to avoid it.
These include:
- Make your mortgage payments on time
- Stay current on your property taxes
- Keep your insurance premiums up to date
- Avoid taking on too much debt
These will go a long way when it comes to avoiding pre foreclosure. Remember, your goal should be to keep your home. Taking these steps will help you do just that.
How Can I Find Pre Foreclosure Homes to Buy?
If you’re looking for pre foreclosure homes, there are a number of ways to find them.
Primarily, you can check with your local courthouse or search online. Let’s take a closer look at each option.
Local Courthouse
The best place to start your search is at your local courthouse. This is where foreclosure proceedings are typically held. You can check the public records for listings of pre foreclosure homes in your area.
Of course, this method can be time-consuming. However, it’s worth it if you’re serious about finding a pre foreclosure home.
Online Search
You can also search for pre foreclosure homes online. This is a much faster way to find pre foreclosure homes. However, you may have to pay a fee to access the listings.
If I Choose to Sell, What Should I Do?
If you’ve decided to sell your home, there are a few things that you’ll need to do.
First, you’ll need to find a buyer. You can do this by working with a real estate agent or marketing the property yourself. Once you’ve found a buyer, you’ll need to negotiate a sales price and finalize the sale.
What Should I Look For in a Real Estate Agent?
Working with the right agent is crucial when selling your home. It’s crucial to find an agent who has experience working with pre foreclosure homes.
They should also be familiar with the foreclosure process. This will allow them to guide you through the sale and help you avoid any potential pitfalls.
Can I Sell My Home Myself?
Yes, you can sell your home yourself. This is known as listing a home for sale by owner.
You’ll be responsible for marketing the property and finding a buyer. You’ll also need to negotiate a sales price and finalize the sale. Keep in mind, selling your home yourself can be challenging.
If you’re not sure what you’re doing, it’s best to work with an experienced agent.
Are There Alternatives to These Options?
Fortunately, there are. Working with a cash buyer is one of the best alternatives to these options.
A cash buyer is an investor who buys homes for cash. This means that you won’t have to go through the hassle of finding a buyer or negotiating a sales price. You can simply sell your home as-is and walk away with cash in hand.
What Are the Benefits of Selling to a Cash Buyer?
There are a number of benefits that come with selling to a cash buyer. More often than not, this option will prove to be superior to alternative routes.
The primary benefits include:
A Quick and Easy Sale
When you sell to a cash buyer, you won’t have to go through the hassle of finding a buyer or negotiating a sales price.
You can simply sell your home as-is and walk away with cash in hand. This is the quickest and easiest way to sell your home.
Avoiding Foreclosure
If you’re facing foreclosure, selling your home to a cash buyer can help you avoid this outcome. This option will allow you to pay off your mortgage and walk away from the property free and clear.
Be sure that you keep this in mind when moving forward.
A Fair Price
Cash buyers are typically willing to pay a fair price for properties. This means that you won’t have to worry about lowball offers or haggling over price. You can simply sell your home for a fair price and move on with your life.
As you can see, there are a number of benefits that come with selling to a cash buyer. This option is definitely worth considering if you’re looking to sell your home quickly and easily.
Where Can I Find a Cash Buyer?
There are a number of ways to find cash buyers. One of the best is to attend local auctions.
Here, you’ll find investors who are looking for properties to buy. You can also search online for more info.
When you’ve found a company you might want to work with, there are specific criteria you should consider. It’s crucial to make sure they’re a legitimate business.
You can do this by reading online reviews and seeing what others have to say. You should also consider the offer they’re willing to make on your home. They should be willing to pay a fair price for the property.
Finally, it’s essential to ensure they have the resources to close the deal quickly.
How Does Working With a Cash Buyer Work?
It’s as simple as it sounds. When you’ve found a cash buyer, you’ll simply need to provide them with some information about your home.
They’ll then make you an offer. If you accept their offer, they’ll close on the deal quickly and pay you in cash. This is the easiest way to sell your home without having to go through a real estate agent or list your home on the market.
Dealing With Pre Foreclosure Homes Doesn’t Have to Be Difficult
Although it may seem daunting at first, dealing with pre foreclosure homes doesn’t have to be complicated. If you understand the process and know what to expect, you’ll be in a much better position to make the best decision for your situation.
Want to learn more about what we can do? Be sure to reach out to us today and see how we can help you.