With millions of homes across the country going into foreclosure, it’s important for both buyers and mortgage holders to understand the process.
What is a Pre-foreclosure and How Does it Affect Homeowners in Cypress?
Foreclosures are sadly becoming a common scene across America, including in Cypress. With numerous homes on the brink of foreclosure, understanding this process becomes paramount for both mortgage holders and potential buyers.
Pre-foreclosure begins when homeowners consistently miss their monthly mortgage payments. Typically, after missing payments for 3-6 months, the bank or lending institution steps in. They’ll issue a warning – this is the “notice of default”. The notice essentially tells the homeowner that they’ve not been consistent with their payments for the last 90-180 days. However, it’s crucial not to lose hope at this juncture.
If a homeowner fails to make the necessary payments, the bank will foreclose on the home, assuming ownership, and evict the homeowner. Thankfully, during this stage of the foreclosure process, a mortgage holder has the opportunity to take advantage of several options to prevent losing their home.
Pre-foreclosure: A Glimmer of Hope
The lending institution usually provides a window of about three months for homeowners to settle their dues, though this can vary. If these dues aren’t cleared within the stipulated time, the bank takes ownership of the home, evicts the homeowner, and proceeds with the foreclosure. But before this drastic step is taken, homeowners have several avenues they can explore to potentially save their homes:
- Refinancing the Mortgage: If there’s equity in the house (i.e., the mortgage is “above water”), refinancing becomes an option. This move can lead to reduced monthly payments. If unsure about this route, homeowners can seek advice from a local Cypress mortgage broker or contact us for connections to trusted professionals.
- Quick Sale to Real Estate Investors: For those who wish to sell quickly, there are reputable real estate investors in Cypress, such as Good Deed Homes. They offer cash purchases and often finalize deals in a matter of weeks. Such quick sales can provide homeowners with the cash they need to cover back-payments. Moreover, arrangements might be possible with the lender to relieve some or all back-payment debts.
- You can contact the bank and ask them to permit a short sale. A short sale involves selling the home for less than its owed amount, with the bank absorbing the difference as a tax write-off. Note: Some short sales might still require homeowners to cover the difference if the sale doesn’t meet the loan’s value.
- You may be able to declare bankruptcy, Declaring bankruptcy can provide a temporary respite. However, it significantly impacts credit scores and remains on credit reports for years..
Communication is Key
Lenders are well-informed about the financial challenges many face. Contrary to what many might think, they’re often willing to work with borrowers. If homeowners maintain transparency and actively communicate with lenders, they’re likely to discover options to stay in their homes or safeguard their credit rating.
It’s crucial to approach pre-foreclosure with diligence. A foreclosure can slash a credit score by 200-400 points and bar individuals from securing any loans for 5-7 years. If you’ve received a Notice of Default, act with urgency and explore available options.
But if you’re not able to find a solution with your lender working directly with them… connect with us. We may be able to help.
Ways We Can Help If You’re In Pre-Foreclosure
- We can potentially help with a short sale – Submit your info on this website so we can evaluate your situation to see if we can help.
- We can buy your Cypress area house – We buy houses in Cypress and would love to make you an all-cash offer on your house too. Just fill out the form here to get started >>
- You can ask us questions and we can provide you FREE guidance and resources so you can make a well educated decision. This costs you nothing, there’s absolutely no pressure, no obligation… just free guidance without a catch.
If you’re in the pre-foreclosure stage… you’ve still got time to fix this situation.
Just connect with your bank to see if they’re willing to work with you… or contact us if you’d like to see what we can buy your house for or to tap into our free foreclosure foreclosure resources.