There are a number of reasons why people lose their homes to foreclosure. Some lose their jobs and can no longer maintain their payments and others have different financial difficulties. Lenders often do not thoroughly check on an applicant’s ability to make payments and homeowners soon get buried in debt. Whatever the reason for foreclosure, the process is basically the same.

Lenders typically file a public notice of default that initiates the process for foreclosure. When this is done, the property officially goes into what is known as the pre-foreclosure stage. Pre-foreclosure is similar to a grace period on a loan. Homeowners have the chance to pull their properties out of foreclosure at this point, provided they can satisfy the amount that it takes to bring their accounts current. The pre-foreclosure period can last for up to six months but this time period is different in different states.

Once a property enters the pre-foreclosure state, there are a few ways that a homeowner can avoid actual foreclosure and bank sale. Paying their accounts up to date is the first and easiest way to avoid foreclosure. Selling the home in what is known as a short sale will also avoid foreclosure. Although the homeowner will not be able to remain in the home, a short sale can prevent foreclosure from showing up on their credit report and making it difficult for them to finance in the future.

It is important that any homeowner in pre-foreclosure speak with an attorney and get advice on the best way to proceed. If the homeowner wants to retain ownership of the home, the lender may be able to provide assistance through a restructuring of the original loan. In any event, contacting your lender at the first sign of financial struggle is essential in helping to avoid the foreclosure process.

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