Unfortunately, thousands of Americans either are in danger of losing or lose their houses every year. Lenders haven’t been entirely concerned with a person’s ability to repay loans when making decisions regarding who can borrow money.

When a borrower defaults on a home loan, the process becomes quite set as far as what happens next. The lender will file what is called a public default notice, officially beginning the period of preforeclosure.

Preforeclosure is something like a buffer zone. The lender is essentially serving you notice that they are about to foreclose, so if you’re going to do something about it, do it now. They can’t actually do anything at this point except serve you notice, so right now is the best time to try and remedy the situation. There are two things that you can do to get out of preforeclosure, and both take a bit of work, but will benefit you by avoiding that stain on your credit.

The first option for you is to pay off the amount that you are delinquent on the loan. Chances are, you’ve only missed a payment or two, so if you can think up any way to make the difference in money, do it. Sometimes, a company will file a public default notice when you are not enough behind to actually start the process, giving you enough time to find the money to pay the amount you are behind.

If finding the money poses a problem, and the reason for falling behind is a short term complication, you may do well to get a personal loan to help pay off the mortgage debt, though this is a less viable option, as you end up with another loan payment. Longer term difficulties force longer term solutions, and nothing is easy down this road.

The other option you have when you are in preforeclosure is to sell your house. Shocking though it may seem, selling the house is the best way to avoid losing it. Of course, this means you still have to move, but the worst part of a foreclosure isn’t always the moving- it’s the stain that it leaves on your credit rating. A foreclosure leaves such damage to your credit that it may be difficult or impossible to buy another house for years to come. Willingly selling the house, even if it’s for a loss, looks much better on your credit, and will allow you to put a down payment on another dwelling.

No matter what you do in preforeclosure, the one thing you cannot do is ignore it. Ignoring preforeclosure is a surefire way for you to lose your house. If you’re going to lose it anyway, it’s better to do it on your terms and preserve your credit score so you can have a fair shake at trying again in better times.

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Filed under: Understanding The Foreclosure Process

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