With millions of homes across the country going into foreclosure, it’s important for both buyers and mortgage holders to understand the process. And the first question that will come up is “what is a pre-foreclosure in Philadelphia?”
So what is a pre-foreclosure in Philadelphia anyway?
Many homeowners across America and Philadelphia are facing difficulties making their monthly mortgage payments.
When a homeowner misses 3-6 months of mortgage payments, the lending institution will issue a warning, notifying the homeowner to pay or 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 number can vary by bank and situation sometimes.
If a homeowner fails to make the necessary payments (payments in arrears as well as current 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 is the very beginning of the foreclosure process.
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 is an official notice, filed with the court, to notify all of the delinquent status on the note.
This document will state that you have not made mortgage payments for the last 90-180 days. It’s important not to panic. First of, you already know that you haven’t made the payments so it’s likely that you have already started to explore the options below before the notice of default comes your way. If not, there’s still time…
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 Philadelphia 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 Philadelphia like us at Signature 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 Philadelphia PA 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. This is called a deficiency judgment.
- 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. We would not recommend this option over the others.
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. Banks are in the business of receiving interest (return) on assets. They don’t want to have to chase down and foreclose on homes – they would rather you just catch up and start paying normally again.
Therefore, 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. Be open, and create a clear line of communication with the bank.
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 our website so we can evaluate your situation to see if we can help.
- We can buy your Philadelphia area house – We buy houses in Philadelphia 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.