With millions of homes across the country going into foreclosure, it’s important for both buyers and mortgage holders to understand the process.
So what is a pre-foreclosure in Worcester anyway?
With the continuing difficulties many homeowners across the country and right here in Massachusetts are facing, it’s no wonder that foreclosures are up. Many, many people are struggling to pay all kinds of bills – including their mortgage. Unfortunately, after missing 3 – 6 months of mortgage payments, banks and lenders will foreclose on a property and repossesses it – even evicting you if necessary.
Once a homeowner has fallen far enough behind on their mortgage (typically 3 – 6 months), they will be notified by the bank that they have a period of time (usually 3 months, but stipulated in your mortgage) to pay back that amount or the house will be foreclosed on by the bank, repossessed, and sold at auction so that the bank can try to make back the money it lost on the loan.
The 3 months after being notified by the bank or mortgage lender is known as the “pre-foreclosure” period. The good news about this period is that it is not too late to avoid foreclosure by selling the house to someone else. We’ll discuss options for how to exactly do that next.
The Options Homeowners in Worcester Have During Pre-Foreclosure
After you’ve fallen behind on your mortgage for a few months, your mortgage lender will send you a “notice of default.” This is a document that states how long it’s been that you’ve not paid your mortgage and asks for payment. It typically gives you 3 months to pay this amount back before a foreclosure. If this has happened, it’s key to remember to keep your head and not panic.
You have some very specific options (depending on the specifics of your situation) at this point, but the sooner you act, the better:
- If you have equity in your home (meaning your mortgage is “above water”), there is a good chance you can ask the bank to refinance to give you lower monthly payments. You should use a trusted local mortgage broker here in Worcester for this. If you need a recommendation, please feel free to contact us here at SRS Cash Home Buyers. We have lots of experience helping people sell their Worcester homes during pre-foreclosure
- It’s still possible at this point to make a quick sale to a reputable real estate investor who knows the Worcester area like SRS Cash Home Buyers. By doing this, you can use the money from selling the house to pay off all or some of the money you owe on back rent or work out a situation where you can use the proceeds to pay your home off completely. We have worked with many banks here in Worcester and may be able to help you negotiate a favorable deal.
- If you owe so much on your home that selling it would not bring in enough to pay off your mortgage completely, SRS Cash Home Buyers can also work with you and your lender on a short sale. Sometimes the bank will agree to write off the difference as a loss for a tax write-off. In other cases, you may still owe any amount not covered by the short sale.
- Another option is to declare bankruptcy. This will buy you time to pay off what you owe, but it will remain a stain on your credit report for several years and could cause all kinds of damage down the line, so it is a very risky option.
Most banks and mortgage lenders are highly aware of the struggles that homeowners are going through across the country. They are usually willing to work with you if you fall behind on your mortgage to avoid a full foreclosure. The key is to communicate honestly and upfront to keep all your options available to you.
Remember, a foreclosure can impact your credit score and make it so that you can’t receive any loans for 5+ years. If you have received a notification that you have defaulted on your mortgage payments, don’t ignore it. The sooner you act, the more options you have.
If you’ve tried everything and don’t know what to do, give SRS Cash Home Buyers a call. We specialize in helping Worcester homeowners who need to sell as quickly as possible while still receiving a fair price for their Worcester house.