Sometimes, life can be tough. If your financial situation isn’t looking good and you haven’t been able to meet your mortgage repayments, you’re in danger of foreclosure.
Fortunately, though, there is a grace period between the time the public default notice is filed and your home is foreclosed. During this preforeclosure period, you have a chance to sell your property and look for the best possible deal in what is a very difficult situation.
The Preforeclosure Sale Program allows you to avoid foreclosure by selling your home for an amount that can be used to satisfy your debt, even if the amount is less than what you owe. The length of the preforeclosure period, before the lender is able to foreclose on your property, varies by state and can sometimes be up to six months.
If you have a government-backed mortgage, you may have to meet special conditions to complete a preforeclosure sale.
While the list is lengthy, the U.S. Department of Housing and Urban Development requires the following conditions be met:
The primary benefit of a preforeclosure sale is avoiding foreclosure and the major impact that it can have on your credit score. Your credit score is important to qualify for credit in the future, particularly being able to apply for a loan when you are again in a financial position to think about homeownership.
In addition, once foreclosure has occurred, your mortgage lender will probably try to sell your property for whatever it can get. If the sale price is less than the amount that you owe, you could be pursued by your lender or HUD for a deficiency judgment, which could lead to your being responsible for the additional debt.
During this period, you still have an opportunity to pay off the default. Here are some options to consider:
Be sure to discuss these options, and the preforeclosure sale, with your lender. You may have more options than you realize.