What Are Pre Foreclosure Homes?

Pre foreclosure homes are a common feature in the American residential real estate landscape. It is an unfortunate fact that many people undergo changes in their personal circumstances that can lead them to eventually losing their home. At the time that the notice of default is sent out by the lender, the wheels are in motion and the property enters the pre-foreclosure phase.

With pre foreclosure homes, the owner is under warning to do something about their arrears in mortgage payment. So, this phase is essentially a grace period. But more often than not, the homes end up in foreclosure or they get sold at short sales. The duration of this grace period can vary depending on the location of the home and the rules being followed by the mortgage provider. The most it can stretch is six months, but in most cases it is typically shorter.

During pre foreclosure, the buyer only has two options, and they are: to pay off the debt or sell the home. Paying off the debt usually involves a debt reconstruction or a loan modification. Most mortgage lenders would be amenable to this arrangement to help home owners recover from their difficult financial situation. Even the government lends a helping hand and offers assistance for homeowners wanting to keep their homes by modifying the terms of their mortgage. Home owners who are considering this step can get a lot of help online.

Short Sales

Some owners, on the other hand, opt to cut their losses and sell the home through a short sale. Under this set up, the home owner seeks the approval of their mortgage provider to offer the home for a price that is less than the outstanding loan. This is particularly attractive to buyers as they stand to acquire a property at a fraction of its real market value.

While this is a drastic move, it actually solves a lot of problems for all the parties concerned. The mortgage provider would not have to go through costly foreclosure proceedings, the home owner can prevent a foreclosure mark on their credit reputation and the buyer is assured of a good bargain. Pre foreclosure homes actually sell quickly and it leave home owners in a no much better position than if they were to go through a foreclosure.