So what is a pre-foreclosure in Dallas any way?
Many homeowners across Dallas have difficulties making their monthly mortgage payments and are asking “what is a pre-foreclosure?”. Keep in mind that this is common and don’t panic!
When a homeowner misses 4-6 months of mortgage payments, the lending institution will basically issue a warning notifying the homeowner to either catch up on their payments or lose their home. This is when a homeowner is in default. If this continues without curing the arrears, then the lender will eventually file a “Notice of Trustees Sale” or “Notice of Default”. This period is also known as “pre-foreclosure.”
Banks and mortgage lenders typically provide a reasonable amount of time for the homeowner to become current. Of course, this amount of time can vary by bank and situation sometimes.
After the “Notice of Trustees Sale” is filed and a homeowner continues to fail to make the necessary payments to catch up on their arrears, the foreclosing Trustee will execute the foreclosure of your home by auctioning it off to the highest bidder on the specified date. The winning bidder (a.k.a the new owner) will then evict the previous homeowner (You!). Thankfully, at every stage of the foreclosure process right up to the point that the foreclosing Trustee actually reads the property at Auction for bid, a mortgage holder has the opportunity to take advantage of several options to prevent losing their home.
Some Pre-foreclosure Options for Borrowers
If you’re behind on mortgage payments, you’re likely to receive a “notice of default” or “notice to cure” from your mortgage lender.
This document will state that you have not made mortgage payments for roughly the last 90-180 days. It’s important not to panic!
You have options that can delay or even prevent losing your home:
- If your mortgage is “above water,” (meaning you have equity in your house) you may be able to refinance your mortgage if you have enough credit and can prove income. This will hopefully allow you to reduce your monthly mortgage payments. Check with your local Dallas mortgage broker or contact us and we can connect you with a reputable one.
- You may be able to quickly sell your home to a local real estate investment company that’s reputable in North Texas like us at North Texas Cash For Homes. This will pay off your current mortgage and all back payments owed, essentially solving the problem altogether! No more foreclosure! We can buy your Dallas Texas area home quickly, often in just a week or two, will pay in cash, and takes the stress out of trying to find a buyer in time before the foreclosure auction occurs.
- You can contact the bank and ask them to permit a short sale. In a short sale, you’ll sell your home for less than what you owe to the bank. Most times, the bank will take the loss in this situation. In some short sales, you may still be required to pay the difference to the bank if the house doesn’t sell for what is owed on the loan. It’s important to work with a local short sale expert if this is the route you are considering because a short sale will not impact your credit the same as a typical foreclosure would. Also, keep in mind that the lender doesn’t allow homeowners to make any money on these types of sales so you need to be prepared to walk away without profiting anything from the sale. But the good news is that you no longer have that financial burden weighing you down.
- You may be able to declare bankruptcy. This can potentially buy you more time to pay your debt and stop the pending foreclosure. As long as you’re still in active bankruptcy and current on your bankruptcy payments, the lender will work with you. Keep in mind that this can be even more expensive than the mortgage payments themselves, depending on your situation. And always remember that bankruptcy will remain on your credit report for years and can cause significant damage to your credit. But again, it’s better and less damaging than a foreclosure. If this is the route you choose, it may be a good idea for you to talk to a bankruptcy attorney to get more guidance before seeking bankruptcy protection.
Lenders are very much aware of the widespread financial troubles across the country and they’re willing to work with borrowers a lot of the time.
If you’re honest and stay in constant communication with your lender, you’ll often find that there are options that will allow you to remain in your home, or at least salvage your credit rating.
A foreclosure can often negatively affect your credit score by up to 200 to 400 points or more and can prevent you from obtaining a loan of any sort for up to 5 to 7 years, depending on how heavy the impact is. So it’s crucial for you to be very proactive if you’ve received a “Notice of Default” or “Notice to Cure” from your lender.
But if you’re not able to find a solution with your lender by working directly with them, connect with us. We may be able to help!
Ways We Can Help If You’re Currently 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. Either way, we’ll definitely give you a call to let you know what we discovered.
- We can buy your Dallas area house – We buy houses in Dallas 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 with FREE guidance and resources so you can make a well-educated decision. This costs you nothing, there’s absolutely no pressure, and no obligation; just free guidance without a catch. Just remember that we are not attorneys or financial advisors, so if we can’t answer your question, we can refer you to someone who can.
If you’re in the pre-foreclosure stage you still have time to fix this situation. So “what is a pre-foreclosure?” Hopefully, this helped provide you with a better understanding, but if it didn’t check out another one of our articles we wrote about being behind on payments.
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 offer for your home! Or to tap into our free foreclosure resources, submit your information letting us know this and we’ll reach out ASAP!