Millions of people lose their homes to foreclosure in the United States. That number can trend in the tens of millions during economic recessions.

But what is foreclosure?

Most of us have heard the term. Do you really know what triggers the process and what the process looks like though?

Our aim in this post is to walk you through what a foreclosed home goes through, what to expect as the homeowner, and what you can do to mitigate damage.

Keep reading to learn everything you need to know about this important and harrowing event that could affect you.

What Is Foreclosure?

Foreclosure is the legal process that gets triggered by lenders when homeowners stop making payments on their mortgage.

You won’t be entered into foreclosure after a single missed payment. Usually, payment misses need to have taken place over 3 to 6 months for lenders to start taking legal action.

The intended consequence of foreclosure is to optimally get people living in their homes to start paying what they owe or to get those people out so more reliable dwellers can move in.

What Is a Notice of Default?

Foreclosure doesn’t start until you receive a Notice of Default. This is a paper that is pinned to your front door and lets you know your delinquency has been reported to authorities.

A Notice of Default does not mean you’ve been foreclosed on. It just lets you know the time frame in which you need to make amends with your lender before sheriffs come in and remove you from your home.

What Are Your Foreclosure Avoidance Options?

The easiest way to avoid foreclosure is to pay your mortgage. If that’s an impossibility, talk to your lender to see if you can work something out.

Sometimes a lower interest rate or temporarily lowered payments can help you claw back into a good place.

Another strategy homeowners use is short-selling their houses (selling a house for less than what is owed) and then slowly paying down the difference. Leveraging a selling my property as is service can be a great resource if you need to make a quick short-sell.

What Happens to My Home

If you short sell your house, your home will go to the new buyer and you’ll only be liable to pay the remaining balance to the bank. If you can’t short sell, you’ll be evicted, your credit will be damaged, and your house will go to auction.

Talking to your lender and trying to work out an arrangement is always preferable to eviction. Asking questions like “what is foreclosure” and taking in information is a beneficial step towards you arriving at better resolutions.

Keep Learning and Having Conversations

Knowledge is power when it comes to foreclosure. That’s why we commend you for taking the time to learn more about this topic so you know what to expect and how you can arrive at the best outcome as this process unfolds.

Our team wishes you the best as you speak with your lender about your foreclosed home issues. We also welcome you to read additional content on our blog if you have more what is foreclosure questions.