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Preforeclosure: What Is It and How Does It Work?

Understanding Preforeclosure

Homeowners have numerous stressors to deal with, including struggling to make their monthly mortgage payments. If you miss too many payments, you may receive a notice from your lender that you are in preforeclosure. But what is a preforeclosure, how does it work, and do you have any other options, such as to sell your house fast for cash in Las Vegas?

Understanding Preforeclosure

A preforeclosure is the first part of the foreclosure process. Think of it as your bank telling you that your home will go into foreclosure if you don’t take action. It is essentially a notice that you defaulted on your payments, so the bank will take action.

How Preforeclosure Works

Now that you understand what preforeclosure is, how does it work? The process includes several steps and starts when you miss your monthly payment.

Defaulting

Your mortgage is an agreement that you will pay the bank (or lender) a certain amount every month. Missing a single payment is frowned upon, but you don’t default until you have missed three of them. This is when the bank will ramp up its efforts to get you up-to-date with payments. The good news is that your bank prefers not to foreclose on your home as they will lose money. This means that they may let you reduce your payments, restructure your loan, or delay payments, depending on the circumstances. Of course, that only works in some situations, and not everyone will be in a financial position where any of these options work.

Receiving a Notice of Default

Remember that you are considered to have defaulted on your payment if you miss three month’s worth. If you miss six payments and are not actively working with the lender to come to a solution, they will send you a Notice of Default. This is a legal notice that they send to you and file with the County Recorder. The notice essentially tells you that unless you make payments or work with the lender, they will be taking legal action. Many people consider this phase of the process to be the true start of preforeclosure. Keep in mind that it can last 10 months.

Foreclosure and Auction

If you still don’t take action after receiving a Notice of Default, your home will go into foreclosure, and the lender will typically sell it in an auction. This is their method of recouping some of the cost.

How to Get Out of Preforeclosure

If you are already in preforeclosure or know you will miss future mortgage payments, there is another way to get out of the situation. You can sell your house fast for cash. Use that cash to pay off the remaining balance of your home loan. Then, you can use leftover funds to find a new place to live. Selling your property to Las Vegas cash home buyers is an excellent solution for several reasons. Most importantly, it puts you back in control of the situation. You will have to move out eventually anyway if your home is foreclosed on. By selling to Las Vegas home buyers, you get to choose when you move out and pay off your loan with the bank, saving yourself legal and financial trouble. To minimize the stress associated with preforeclosure and avoid your home going into foreclosure, consider selling your home to cash home buyers at Fast Free Home Offer.

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