How to Sell Your House During Preforeclosure
You’ve fallen on tough times and have fallen behind on your mortgage payments. You are running low on options and your bank is sending warnings that a foreclosure is imminent. This is essentially the “preforeclosure” stage. They may eventually decide to seize your property and there may not be anything you can do about it by the time it is too late. Can you sell your house during preforeclosure?
Preforeclosure Home Selling Options
The good news is you may still have options if you are in the preforeclosure stage. Remember that your bank or mortgage lender are hoping to avoid foreclosure, as well. It can be an expensive legal process and they generally lose money when all is said and done. They may be willing to work with you. You might be able to negotiate some sort of loan forgiveness to stay in your home or at least buy a little extra time to figure out your finances. Or, you may be able to sell your house during preforeclosure to minimize your debt—or possibly even come out ahead if you have strong home equity and don’t wait too long to act.
Do You Have Home Equity?
The value of your home relative to the remaining principal balance of your mortgage loans will be a critical factor in determining your available home selling options. Homeowners who have built up a significant amount of home equity could be in a decent position, even if they are behind on mortgage payments and a foreclosure is looming. You could potentially leverage your equity into a loan refinance or second loan (home equity loan) to help you stay in your house.
The other option that may be even better is to sell your house now, before the foreclosure process kicks into full gear. Your home equity should enable you to pay off what you still owe on your mortgage. Anything leftover after the home sale will go straight to you.
Unfortunately, time is probably not on your side if you are already in preforeclosure. The clock is ticking and you must act quickly. You may not have the time to get your house ready, hire a real estate agent and go through the traditional selling process. That takes a lot of time and may cost you even more out-of-pocket. You will want to consider a fast cash home sale to a local home buyer. There are likely real estate investors in your area who have cash available and can buy your house quickly. They will generally buy your house in as-is condition and cover most—if not all—closing costs. And, because they are buying with cash, the closing process can go very quickly.
A cash sale to a real estate investor or a home buying company like PropertyLark allows you to sell your house fast in order to avoid foreclosure, and you will not be paying hardly anything out of your own pocket. Your mortgage can be paid off because you have enough home equity, and you won’t have the knock on your credit score and other financial challenges that come with experiencing a home foreclosure.
What if I am Upside-Down on My Mortgage?
If you are upside-down on your home loan (meaning you owe more on your mortgage than the property is worth), then you may still have home selling options during the preforeclosure stage. You can sell your house fast for cash. Pay as much of your mortgage off as you can and then work to pay off what you still owe after that. Or, you can ask your bank/lender about short sale options. They may be willing to forgive some (usually all) of your remaining debt by selling your property. Your credit score will take a hit after a short sale, but you can generally avoid owing any more to the bank.
The important thing to remember is that you may still have home selling options when facing foreclosure. It’s important to understand the different solutions and get help before it’s too late. Contact PropertyLark for help with your preforeclosure home sale. We can make you a fair and fast cash offer or we can walk you through a more traditional home selling process if that’s the best course of action. Fill out the form on the right to get started.