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What is a Pre-Foreclosure in Salem?

It’s been over 10 years since the last mortgage crisis, but many homeowners still remember those terrible times. The foreclosure rate dropped steadily since 2010 but in the first quarter of 2020 it suddenly spiked, with an increase of 42% over the previous quarter. With tens of millions of Americans suddenly unemployed, it’s likely we’ll continue to see more and more homeowners start to fall behind on their mortgage. It’s important for both buyers and mortgage holders to understand what happens when a borrower falls behind on payments.

So what is a pre-foreclosure in Salem anyway?

Many homeowners across America and Salem, Independence, and throughout the Willamette Valley 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 90 days for the homeowner to get caught up on their payments.  Of course this number can vary by bank and situation sometimes.

If a homeowner fails to make the necessary payments, the bank will foreclose on the home and assume ownership. Sometimes the bank will evict the homeowner, and other times they will allow the previous owner to continue living there. But even if the resident is allowed to continue living there, they will eventually be evicted when someone buys the house at auction.

Thankfully, during the early stages of the foreclosure process, a mortgage holder has the opportunity to take advantage of several options to prevent losing their home. The sooner they act, the more options they have.

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 a legal document that formally accuses you of failing to make your 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:

  • Fortunately, most people have some equity in their home because prices have been rising. If you have equity in your home, you may be able to refinance your mortgage, receiving lower monthly payments.  Check with your local Salem mortgage broker… or contact us and we can connect you with an excellent one. Keep in mind it usually takes at least one month to close on a refinance. And if you’ve recently lost your job, you may no longer qualify for a mortgage.
  • You can always check with your lender about mortgage relief programs they offer. Lenders don’t want to take ownership of houses, so it’s in their interest to work with you to get your payments current. You can also check with the state or federal government for programs that help homeowners in danger of foreclosure.
  • If you don’t think you can refinance or get current on your payments, you can try to sell your house for full price to a traditional buyer. This option carries some risk. Even though the Salem housing market is still pretty hot right now, it can still take time to find a buyer. Once you find that buyer and agree to a selling price, the buyer has to apply for a mortgage. If they can’t get approved, the sale might fall through and you’re waiting even longer. The risk is your bank might foreclose before you’re able to sell.
  • You may be able to quickly sell your home to a local real estate investor that’s reputable in Salem like us at Willamette Home Buyers, 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 Salem OR area home quickly, often in just a week or two. We can pay in cash or find other creative payment methods to solve your problem, and we take the hassle and stress out of selling your home.
  • If you’re underwater on your mortgage, 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 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.

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.

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.

A foreclosure can often drop your credit score by 200-400 points and can prevent you from obtaining a loan of any sort for 5-7 years, so be careful 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

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.

Want To Discuss Your Pre-Foreclosure Options? Call Us at 503-383-1686
Or, Submit Your Info Here To Get A Cash Offer On Your House >>

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