What Is the Difference Between Pre-Foreclosure and Foreclosure?
While many people know the term “foreclosure” and what it might entail, few know what a pre-foreclosure is. Understanding the difference between pre-foreclosure and foreclosure can help you make smart decisions regarding distressed properties as a homeowner or real estate investor.
If you’re asking, “How can I sell my house fast in Chattanooga?” we at Chattanooga Property Solutions can help. We’re a veteran-owned and operated company specializing in buying and selling properties in the area fast. Below, we explain the differences between the pre-foreclosure and foreclosure processes.
What Is a Foreclosure?
Homeowners often find themselves facing foreclosure when they fail to make their monthly mortgage payments for several consecutive months. At that point, the property’s ownership goes back to the bank holding the home loan.
You’ll lose the property if it goes into foreclosure. Selling the property as quickly as possible is the bank’s main goal, which is why foreclosed homes have low prices.
What Is Pre-Foreclosure?
Pre-foreclosure refers to the 90 days before a foreclosure. During this period, the property is still yours, not the bank’s. When you’re three months delinquent on your mortgage payments, your bank will send you a notice of default stating it’ll take legal action unless you pay your debt in full within 90 days.
Pre-Foreclosure Options
It’s best to avoid foreclosure and fulfill all terms in your mortgage contract, which you can do during pre-foreclosure. At this time, you can:
- Catch Up on Missed Mortgage Payments: Get back in good standing with your home loan lender by making your missed payments and paying all late fees and penalties.
- Get a Deed in Lieu of Foreclosure: You could take a deed in lieu of foreclosure and move out of the house without the loan debt by turning over the property’s ownership to the bank.
- Request a Loan Modification: If your current loan is too much to handle, your lender may offer to modify your loan by lengthening the term, dropping the mortgage rate, or deferring payment.
- Unload Your House in a Short Sale: With a short sale, you can quickly offload your house for less than your mortgage debt.
Pre-Foreclosure vs a Foreclosure
The main difference between pre-foreclosure and foreclosure is time. With pre-foreclosure, you have several ways to absolve the debt to your lender while still owning your home. Though some options will force you to leave the property, you won’t take a big hit on your credit score or pay the lender out-of-pocket.
With a foreclosure, no options are available. You will lose your house to the bank, which will sell it quickly via auction.
Price is another difference. Foreclosed homes for sale are cheaper than pre-foreclosed ones.
Sell Your Home with Chattanooga Property Solutions
Thanks to our 20+ years in the real estate industry, we at Chattanooga Property Solutions know the difference between pre-foreclosure and foreclosure. We can help you sell a house in foreclosure or pre-foreclosure. We proudly serve Chattanooga, Tennessee and the surrounding areas as the only five-star rated company in the area that will buy a foreclosure as is.
Contact Chattanooga Property Solutions today at (423) 454-3070 for a consultation.