Buying a home is already difficult enough without worrying about the expenses and other fees that come with it. What makes it more complicated is the time limit upon which one must pay up to avoid defaulting on the loans.
You’ve heard the same story repeatedly—a person will apply for a home loan, and their loan will get approved. They proceed to pay the down payment, after which they may finally move into their dream house. Things will go smoothly at first until somewhere down the right, they are unable to repay their loans—leading to foreclosure.
This is a sad reality that often takes a turn in one way or the other. To help you fully understand pre-foreclosure, here’s a quick guide to follow:
What Is a Home Pre-foreclosure?
The good news is that it doesn’t always have a bad ending. Before the house can even get foreclosed, there is a certain period where the lender will notify the homeowner about their possible default.
The notice of default (NOD) will indicate that the borrower only has a certain amount of time to pay up what they owe or risk losing their home to the lenders. This specific period is known as the pre-foreclosure stage.
What Is the Difference between Pre Foreclosure and Foreclosure?
These two terms are closer to each other than you think, but the rule of thumb is that they refer to situations that come one after another. Pre-foreclosure is the grace period wherein the borrower will have to pay their debt. On the other hand, foreclosure occurs right after the borrower has not been able to pay for what they owe.
Should I Buy a Pre-foreclosure?
Purchasing a property for pre-foreclosure all depends on the situation. Remember that pre-foreclosed homes aren’t put up for sale before they reach the foreclosed stage, so you would really have to dig deeper to identify a pre-foreclosed home.
The good news is that once you do find one, you may make an offer that will entice the homeowner to sell off their property. This may not be that hard, as remember, they are aiming to pay up their debts. If you have the money to fulfill those, they might undoubtedly take up your offer.
Are There Advantages and Disadvantages in Buying a Pre-foreclosure?
As with all things, yes, you may find both factors in pre-foreclosed homes. For one, they are more affordable than other new homes in the market today. They also enable you to customize them since some pre-foreclosed homes are still in need of renovations. This is both an advantage and disadvantage, as some homes may require many upgrades to look better, amping up your expenses in the process.
They may also have had unpaid taxes since the homeowner may have already been struggling with their other payments, causing them to end up in the pre-foreclosed stage in the first place. You may also need to read up more when handling the pre-foreclosure process, as it is different from the other property-buying processes.
Conclusion
Thankfully, understanding how home pre-foreclosures work isn’t really complicated. Always keep in mind that they are the grace period given before a foreclosure even happens. Depending on the decisions made by the homeowner, they may either get out of their pre-foreclosure dilemma unscathed or end up falling into the foreclosure category.
Regardless, you can make the most out of their situation by buying up their property or even making an offer that will even work in their favor. Know the different processes and requirements behind pre-foreclosures and drive away with a great deal by the end.
If you wish to invest in pre-foreclosed properties, you may need help from property management companies in Lakeland, FL. In that case, Orlando REO Professionals Inc. is at your service. We specialize in property management, real estate, REO, investment property advice, and wealth management. Let’s make it happen—reach out to us today!