With millions of homes across the country going into foreclosure, it’s important for both buyers and mortgage holders to understand the process.
So what is a pre-foreclosure in Rhode Island?
Between inflation and rising interest rates, several homeowners across America and Rhode Island are facing difficulties keeping up with their monthly mortgage payments.
When a homeowner in Rhode Island misses 3-6 months of mortgage payments, the lending institution will issue a written warning, notifying the homeowner of their arrears and demanding payment before foreclosure on your home. This period is generally known as “pre-foreclosure.”
Banks, credit unions, and mortgage lenders typically provide three months for the homeowner to become current on payments. Of course this number can vary by lender and state, however that length of time is standard in Rhode Island and offers homeowners an opportunity to make good on their payments before losing their home. This can also be seen as a window of opportunity for many who may be able to sell their home quickly for a fair cash offer and are able to pay the remainder of their debt with it.
If a homeowner fails to make the necessary payments after this grace period, the bank will continue with foreclose proceedings on the home, assume ownership, and eventually evict the homeowners who did not maintain payments. Thankfully, during this early stage of the foreclosure process, a mortgage holder has the opportunity to take advantage of several different options to prevent losing their home and walking away with nothing.
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 document will state that you have not made 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:
- If your mortgage is “above water,” (meaning you have equity in your house) you may be able to refinance your mortgage, receiving lower monthly payments that may fit into your budget. Check with your local Rhode Island mortgage broker… or contact us and we can connect you with a reputable broker we prefer to use for all of our financing needs.
- You may have the option to quickly sell your home to a real estate investor that’s reputable in Rhode Island like us at Home Tree, 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 Rhode Island area home quickly, often in just a week or two, we will pay in cash, and we can take the stress out of trying to find a buyer and navigating the process of selling your home on the market. With our knowledge and expertise of the Rhode Island real estate market we can be the guidance you need to get you through this stressful time and keep you whole.
- You can contact the bank yourself 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. However, bankruptcy will remain on your credit report for years, and can cause significant damage to your creditworthiness and ability to finance property such as cars, homes, or even personal loans going forward.
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 so don’t give up until you’ve exercised all the options available to you and made the best decision.
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 negatively affect your credit score by 200-400 points and can prevent you from obtaining a loan of any sort for 5-7 years, so be very dutiful if you’ve received a Notice of Default from your lender.
But if you’re not able to find a solution with your lender by working directly with them… connect with us. We may be able to help. We offer a wealth of knowledge and local Rhody expertise that can help guide you through your options.
Ways We Can Help If You’re In Pre-Foreclosure
- We can potentially help with a short sale – Submit your info on this website so we can evaluate your situation to see if we can help.
- We can buy your Rhode Island area house – We buy houses in Rhode Island and would love to make you an all-cash offer on your house too. We are a local small company and our reputation is our greatest asset, you can put your faith in us to guide you as a trusted fiduciary in the Rhody area. Just fill out the form here to get started >>
- You can ask us questions and we can provide you FREE guidance and resources so you can make a well educated decision. This costs you nothing and there’s absolutely no pressure or no obligation to sell with us… just free guidance without a catch.
If you’re still in the pre-foreclosure stage… you’ve still got time to fix this situation, YOU HAVE OPTIONS. We are laid back Newport locals and are super easy to talk, feel free to reach out anytime.
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 resources.