Are you biting your nails after receiving a pre-foreclosure notice in the mail? Don’t panic just yet! You still have time to plan your next move.
At Wise Property Buyers, we buy houses in Detroit, Michigan. Our experience enables us to help you understand the difference between pre-foreclosure and foreclosure. Let’s explore what these terms mean and what you should do below.
Dissecting the Difference Between Pre-Foreclosure and Foreclosure
No property owner wants their property to fall into foreclosure. After all, you likely purchased your home to live there permanently or semi-permanently. So, what should you know about pre-foreclosure vs. foreclosure?
Pre-Foreclosure
When you purchased your property, you likely took out a mortgage loan to cover the price. That loan came with payment requirements and time constraints. Your loan account may enter pre-foreclosure status if you defaulted on at least three payments. Pre-foreclosure is among the first property default phases before your mortgage provider finalizes the foreclosure.
Foreclosure
Foreclosure means that your mortgage loaner has already reclaimed your property. However, the provider must first complete the following foreclosure process stages before doing so:
- Pre-foreclosure: You failed to make a predetermined number of timely payments and have exhausted the loan default stages.
- Notice of trustee’s sale: Your lender’s attorney schedules and advertises the property sale.
- Trustee’s sale: The lender sets a minimum bid. Your property goes to the highest bidder.
- Real estate owned: Your lender may erase some property liens if it doesn’t sell at the auction to attract more buyers.
- Eviction: This step marks a major difference between pre-foreclosure and foreclosure. Once your lender finalizes the property sale, they will send you an eviction notice, marking the end of your property ownership.
What You Can Do During Pre-Foreclosure
Entering pre-foreclosure status is scary. Fortunately, you can take the following measures to maintain ownership or profit from your property.
Make Up Missed Payments or Modify Your Loan
Are your financial struggles temporary? If so, you can cover what you owe and any incurred fees during the pre-foreclosure process. This will bring you back up to date on your balance.
Alternatively, you might request a mortgage modification. Your lender may work with you if you otherwise made timely payments and provide evidence of your temporary struggles. Some adjustments are temporary, so pay close attention to the fine print.
File for Bankruptcy
Bankruptcy can slow or halt the real estate foreclosure timeline. Determine whether you qualify for Chapter 7 or 13 Bankruptcy and prepare to take a major blow to your credit score.
Quickly Sell the Property
If you don’t qualify for bankruptcy and cannot balance your loan account, you can still sell your property for profit. Cash buyers purchase distressed properties and often offer cash amounts that cover outstanding debts. You might even profit enough to cover a downpayment for a new home.
Avoid Foreclosure With Wise Property Buyers
The difference between pre-foreclosure and foreclosure is that pre-foreclosure means you still have time to strategize a property sale. You can sell a house with a lien and other concerns to Wise Property Buyers in Detroit, MI. Call 313-513-8824 for a cash offer.