The real estate market has become overheated. Interest rates are extremely high and millions of homes across the country are at risk of going into foreclosure, it’s important for both buyers and mortgage holders to understand the process. Lenders are no longer going to be accommodating when the number of foreclosures starts to skyrocket.
During and after COVID many homeowners that were at risk of foreclosure had a safety net that protected them from lenders that would normally have foreclosure on them. That ended in July of 2021. Since then many lenders started foreclosing on homeowners. But the list is long and is taking a long time to process. To this day there are still people with unpaid mortgages still living in their homes and no foreclosure action has started.
So what is a pre-foreclosure in Connecticut like anyway?
Many homeowners across America and Connecticut are facing difficulties making their monthly mortgage payments. They bought into a market with high interest rates and increasing prices. They may have bought more house than they can afford.
When a homeowner misses over 3 months of mortgage payments, the lender will issue a warning, notifying the homeowner to pay or they will lose their home. This period is known as “pre-foreclosure.”
Banks and mortgage lenders typically provide three months for the homeowner to become current. Of course this deadline can vary by bank and situation sometimes.
If a homeowner fails to make the necessary payments, the bank will foreclose on the home, assuming ownership, and evict the homeowner. Thankfully, during this stage of the foreclosure process, a mortgage holder has the opportunity to take advantage of several options to prevent losing their home.
Pre-foreclosure Options for Borrowers
If you’re behind on mortgage payments, you’re likely to receive a “notice of default” from your mortgage lender.
This document will state that you have not made mortgage payments for 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, receiving lower monthly payments. Check with your local Connecticut 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 real estate investor that’s reputable in Connecticut like us at Next Door Properties, using the cash acquired to pay the months of back-payments owed (or we *may* be able to work out something with the lender that relieves all or part of your back payments. We can buy your Connecticut 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.
- 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 it’s worth, and the bank will take the loss as a tax write-off. 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. You will be evicted from the house and will have a debt that will follow you around until it is paid off.
- You may be able to declare bankruptcy, which can buy you time to pay your debt. Bankruptcy will remain on your credit report for years, and can cause significant damage. You will have difficulty buying another home, getting approved for renting a place to live, establishing credit, or starting a business. In some cases it can limit your options for places to work since some employers require credit checks now.
Lenders are very much aware of the widespread financial troubles that are growing across the country and they’re willing to work with borrowers a lot of the time but that may soon be ending. As financial troubles grow in the economy and the backlog of foreclosures from COVID still on their books banks are in a weak position and they are rapidly changing their position on helping.
If you’re honest and communicate 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. The worst thing you can do is ignore your lenders communications. Lenders are not like some collection agencies that will call and harass you every day. They mostly want to understand where you are and what you can afford to pay and make sure you are leveraging programs that can help you if your low income, or can still afford to pay but at maybe a lower payment plan.
A foreclosure can often negatively affect your credit score by 200-400 points and can prevent you from obtaining a loan of any sort for 5-7 years, so be very dutiful if you’ve received a Notice of Default from your lender.
But if you’re not able to find a solution with your lender working directly with them… connect with us. We may be able to help.
Ways We Can Help If You’re 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.
- We can buy your Connecticut area house – We buy houses in Connecticut 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 FREE guidance and resources so you can make a well educated decision. This costs you nothing, there’s absolutely no pressure, no obligation… just free guidance without a catch.
If you’re in the pre-foreclosure stage… you’ve still got time to fix this situation.
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 buy your house for or to tap into our free foreclosure foreclosure resources.