The foreclosure process can be complex, with numerous steps in the process. With so many homes going into foreclosure across the U.S., it’s essential that all involved, including those with mortgages and buyers looking for a deal, understand the entire process.
What Does a Pre-Foreclosure in Chicago Mean?
Chicago is not unique in that many homeowners here are facing difficulties with making mortgage payments on time or at all. To remain in good standing with mortgage lenders, homeowners have to make payments on time. If they fail to do so for a period of time, generally 3 to 6 months, that’s when the lending institution will issue a warning that they may lose their home due to nonpayment. This period of 3 to 6 months is considered the pre-foreclosure period.
Keep in mind that this timeframe may be much shorter. Legally, mortgage lenders can act on a lack of payment right away, even after missing just one. Most lenders provide some time for the property owner to get current on their loan. This varies from one lender to the next. Still, the key is for anyone who has missed a payment to get caught up – with all necessary payments and late fees – before foreclosure warnings are issued.
When a homeowner does not make those payments within the timeframe the lender provides, the bank then takes steps to foreclose on the property. These steps may include assuming ownership, forcing the sale of the property, and evicting the homeowner from the property.
In many cases, homeowners have an opportunity to take advantage of several opportunities that may help them prevent losing their homes. To do so, they typically need to act quickly and understand the consequences of each option.
What Options Do Borrowers Have During Pre-Foreclosure?
Every situation is different. However, if you want to remain in your home, your best bet is to get your mortgage payments caught up to avoid the foreclosure process from continuing.
If you fall behind on your payments, you are likely to receive a letter from your mortgage lender called a notice of default. This document outlines that you have not made a payment within the last 90 to 180 days (depending on the lender’s rules).
At this point, you may be worried about what to do or how to get help. Don’t panic. You have options that may help you delay the process or even help you prevent losing your home to foreclosure. Here’s a look at some of those.
Above water mortgage
Do you have equity in your home? Equity means that you owe less on the home to the lender than the home is worth. That means you have an above water mortgage. In this situation, if you have income, you may be able to refinance your mortgage. This could help you to lower your monthly payment to make it more affordable to do so. A Chicago mortgage broker may be able to help you to determine if you qualify for this opportunity.
Sell your home to an investment
The second option that may be beneficial to some people is to sell their home to a real estate investor in Chicago. If you go this route, you want to be sure you are selling to a reputable investor in Chicago, one that has helped other people in this situation to get the financial help they need. You can get fast cash for your home. You can then use that cash to pay the back payments you have. In some cases, we can help to relieve all of the back payments from the lender.
In short, with our help, you may be able to get help if you allow us to buy your Chicago home right away. Often we can complete the process within a week or two. That means you can have cash in a couple of weeks to use as you see fit. This process helps to reduce all of the stress you feel facing the sale of your home. It also means you’re in control over what happens to your home and not the bank.
Short sales in Chicago
In some situations, lenders will allow for a short sale. That means they may allow you to sell the home in Chicago for less than you owe on it. The bank then takes a tax write-off for the loss they have. Short sales may still require you to pay the difference to the bank, though. This may be an option for you if you want to sell your home.
If you are struggling with the debt from your home and perhaps other debts, bankruptcy may help you to get a fresh start. It does place a mark on your credit report that remains for years. For some, this option is beneficial in revealing their financial burden.
Talk to your lender in Chicago
Most lenders understand a lot of people are facing financial difficulties. They may be willing to work with borrowers. Be honest and open with your lender. Let them determine if there are options that may help you.
Allow the foreclosure
Allowing the foreclosure to happen seems like a good thing for some people. It rarely is. It hurts your credit score potentially by hundreds of points. It may make it difficult to get a new loan over the next 7 to 10 years. Most often, you’ll want to avoid this.
We May Be Able to Help You Avoid Pre-Foreclosure
If you are in pre-foreclosure in Chicago, don’t wait to get help. Reach out to us to allow us to offer solutions for you. These solutions may include:
- Help you with a short sale of your property.
- Buy your home for you – we buy houses in Chicago for cash and in all conditions.
- Ask us questions to allow us to offer you advice. It’s just free advice.
You have some time to make decisions if you are in the pre-foreclosure stage. Yet, that doesn’t mean you can sit and wait. It’s important to take action now to get the help you need.