In this article we will talk about your options when in pre foreclosure. There are many solutions to selling your house in pre foreclosure. We buy houses in pre-foreclosure all the time and usually selling your house is a last resort if you have no other option and also want to sell. I want to talk about six different things that you could do when you enter into pre-foreclosure and you’re looking for an option. There are many ways out or another thing to do with your house. So here are a few options:
Catch up the mortgage. The most obvious thing to do would be to catch up the mortgage payment and then you’re not in default and the banks not going to try to take your house. More than likely if you could you probably would, so we’re going to move on to number two.
Forbearance agreement. A forbearance agreement is an agreement with the bank or your lender to stop payments. This will give you time to reorganize the debt or get your finances in order to figure out something else with the bank. But what it does is put a temporary stop on the payments and you would have to ask your bank if this is something that you’re allowed to do.
Loan modification. Maybe you do number two a forbearance agreement and then you work on number 3 a loan modification. With a loan modification what you’re going to do is you’re going to renegotiate the length of your loan and you’re going to renegotiate the interest rate. And so maybe you have a five or six percent interest rate and you have 10 years left of your mortgage. What the bank may do is to go back to a fresh start and you would have a new 30-year mortgage and maybe the interest rates are now down at three and a half percent and they’ll give you a lower interest rate in a longer term, which is going to make your payment less. If your payments are less you may be able to get back on track and then you can keep your house and not have to sell your house for cash.
Short sale. This is an agreement with the bank again. You can see a common theme here. You’re probably going to have to work with your bank your lender to figure out how to stop the pre-foreclosure process. With a short sale that is actually a sale and you might have enough equity in your house to sell at the amount that’s owed. If you owe $200,000 and your house is worth $200,000 or a little bit more , then there’s not enough to cover the realtor cost and closing costs. If you’re trying to sell to an investor they will likely not want it because there’s not enough equity.
In this case, you’d have to go to the bank and say, “Hey, can I short sale my house? I need to sell it for you X dollars and are you will you guys allow me to do this?” Sometimes they will allow a cash house buyer like LVN Real Estate to come in and make an offer for let’s say $150,000 and at that time the bank might say, “okay, we’ll sell the house to LVN Real Estate for $150,000 even though you owe 200k and that way you’re not going to go into pre-foreclosure. You will have a short sale that you have to do, but the house will be off your books and you will no longer owe the payment and it will get sold.
Deed-in-lieu. With this you would be basically giving the house back to the bank and walk away. So you would sign a document that says. The house is no longer yours. You have to move out of the house and you would give the house back to the bank and at that time the bank’s going to take over and they were likely sell your house.
Sell your house for cash. Especially if you have equity and you’re behind on your mortgage payments and you enter into pre-foreclosure, this may be a great choice for you, as you’ll walk with cash from the sale. You could look for a cash buyer and search Denver cash buyer and a buyer like LVN Real Estate will come up and we’ll make you a cash offer on your home at that time. We can work together to come up with a fair price. You may have enough equity in the house where you can actually walk away with money.
Even if you owe money on the house oftentimes, you might be down to the wire you might have a week left, maybe two weeks left and you have no other options, you can’t work with a bank anymore. If this sounds like your situation, you need to sell your house fast! The bank may not be answering the phone and you need to sell your house fast. That’s when you would call LVN real estate and we will take care of you. We will buy your house quickly and we will get you out of the pre foreclosure situation.
BK / Bankruptcy. If you do a BK of bankruptcy and you file chapter 13, that will also stop the foreclosure process. Of course, you’re going to have a bankruptcy on your record so you really want to think hard about doing that but you could stop the process at that point and reorganize your debt to do one of these options here that are listed and you could file a bankruptcy to stop the sale in order to move forward with another option.
Just know that you have a lot of options. And it’s worth a call to LVN Real Estate to see if a cash offer for your house is best for you. We buy houses in Denver, Greeley, Colorado Springs, and more! We work with people all the time pre-foreclosure and we can help you come up with a solution and talk more about it. Maybe a cash sale is not your best option, but maybe one of these other things we could guide you through and help you reach a solution.
If you’re interested or want more information. Please reach out to us. We look forward to hearing from you!