Buying a home with the help of a mortgage can be a great investment. However, it also presents a significant risk: We have no control on the future economy and how housing prices will change in the future.
Therefore, many people can come into difficulties when it comes to paying their mortgage, through no fault of their own. This makes it a possibility that they will have to lose their home to foreclosure in the future. However, there are many options that people can consider before resorting to foreclosure.
An introduction to foreclosure
Foreclosure is a process led by lenders when the borrower is not making his or her repayments. It means that they can legally gain ownership of the property and sell it so they get back what they are owed.
What is a pre-foreclosure sale?
Many people try to avoid foreclosure at all costs. This is because they do not want to lose their financial stakes in the property, and be back to square one. A pre-foreclosure sale is the act of the borrower taking matters into his or her own hands and selling the property before the lender legally possesses it. This allows the borrower to raise the funds, or at least most of the funds, to pay back the mortgage.
If after selling the property, there are not enough funds to pay back the mortgage in full, you may still owe the lender money. However, it is possible to come to an agreement with the lender to agree to forgive these owed funds in the event of a successful sale.
If you are trying to avoid foreclosure, it is important that you consider all options and what they will mean for your specific situation.
Source: FindLaw, "Pre-Foreclosure Sale," accessed Feb. 28, 2018