No matter how far homeowners fall behind on their mortgage, leaving the house before they are given an eviction notice can be a mistake. There are a number of different strategies that homeowners can use while facing foreclosure but before moving out to put themselves into a better financial position to deal with the aftereffects of a foreclosure situation. Moving out of the house prematurely can eliminate some of these opportunities to recover financially before starting fresh after foreclosure.
Once a borrower begins missing mortgage payments, the first step the bank will take is to begin the initial foreclosure lawsuit. This typically takes anywhere from 3-6 months after the first missed payment, and merely signals the bank beginning the process of taking back the house. Just because the homeowners know that they are behind, this does not mean that the courts will automatically grant the foreclosure — the bank still has to go through the correct legal channels and prove their case.
Thus, it would not be a good idea at this point for the owners to move out, because there is simply nothing that the courts have done yet to grant possession of the house to the lender. But even as the next step in the foreclosure process approaches, the owners may still have time to remain in the property. This next step is the sheriff sale of the house, also known as a foreclosure auction or trustee sale, depending on the terms used by the state and county.
Once a house is sold at the public auction, the homeowners usually no longer have any ownership interest in the property, or at least the purchaser has some claim to the title. In some states, however, it is even premature to move out soon after the sheriff sale, due to redemption period laws. States with a redemption period allow homeowners to keep living in their foreclosed house and have a chance to pay off the amount due to retain ownership. During the redemption, they can not be evicted and do not have to move out.
All of these periods, after the initial missed payments, the time from the lawsuit to the sheriff sale, and the period after the sheriff sale, can be used by homeowners to begin repairing their financial positions. Even if they know they can not save the house, the state laws grant them certain amounts of time that they can use to begin putting money away, paying off other debt, or otherwise begin planning for the future.
Moving out of a house after a few missed payments or at any time before the eviction order is given may be premature and negatively impact the owners’ ability to sustain themselves economically after the loss of the house. In some cases, just having the extra time may even allow families to find a solution that will allow them to sell or pay off the amount they owe to the bank; moving out too soon would not allow them even this small last chance to save the house.
Thus, homeowners who have fallen behind on their mortgage should do everything they can to work with the bank and within the court system to get as much time as possible. Simply assuming they will be kicked out of their property after a few missed payments only makes sure that they will lose the home and face a more uncertain future after foreclosure. But using the protections of state foreclosure law and the time given to them, they can often begin repairing their credit and finances, which is an opportunity they would otherwise lose by moving out of the house too soon.