The pre-foreclosure period can be a very stressful time for you and your family. You don't know whether or not the house you have made a home out of the last several years will still be yours soon. You face a lot of uncertainties and the future may look bleak. While this is not an enjoyable time in anyone's life, there are some options before you. You don't have to simply let the foreclosure go through and end up out on the street. Here are a few options to consider during the pre-foreclosure period of your mortgage.
One of the most overlooked options out there is loan modification. Before you go into foreclosure, your bank will probably be willing to negotiate with you. The last thing they want to do is foreclose on your house. Your lack of payments has forced them into this decision. Therefore, if you can figure out a payment plan that will get you back on track, they will be more than happy to help you out. They want to keep you in your house and keep the payments coming in. Otherwise, they will lose a significant amount of money and be forced to sell a house that they don't want.
When it's time to negotiate, the bank may be willing to change several things for you. They might be able to give you a new loan with a lower interest rate depending on what the prevailing interest is at the time. If you can get a lower interest rate, you may be able to keep your house with a lower monthly payment than you originally had.
The bank also might be willing to waive all of the late fees and payments that you've had if you can get back on track. Starting from square one again is a great way to get your situation under control. When you have a lot of payments piling up on you, they can seem overwhelming whether you can afford them or not. A good loan modification could get you back on your feet.
Another overlooked option is using private money lenders. These lenders, also called hard money lenders, will work with those that are facing hard times. If you are facing foreclosure, you might think that no one would be willing to work with you on a new loan. However, hard money lenders are willing to work with those in almost any situation. As long as they believe they can get a nice return on their investment, they will consider any deal. Therefore, it is in your best interest to at least talk to them.
The loans that they provide are not ideal, but when you are desperate, they may be the best option. You will have to pay a much higher interest rate and then probably a balloon payment at the end. However, they can act as a stopgap until a new loan can be secured.