Do I qualify to avoid foreclosure by using a pre-foreclosure sale? What's the advantage of a pre-foreclosure sale?

A pre-foreclosure sale involves selling your home before foreclosure and then using the money you make from the sale to repay whatever you can of the balance of the loan. In most cases, the amount you obtain in the pre-foreclosure sale will not be enough to fully pay off the entire balance of the loan. The option is made available through a special program offered by the government to handle the fact that foreclosures have become more prevalent due to the mortgage crisis.

Choosing a pre-foreclosure sale has several advantages including:

• Less damage to your credit. Actually having the bank foreclose on you can do serious damage to your credit report and the foreclosure can remain on your report for 7 years. 
• Avoiding the risk of a deficiency judgment. If the bank forecloses, in some states it can come after you and get a deficiency judgment if the sale of the home doesn't generate enough money to pay off the loan

Whether or not you qualify for a pre-foreclosure loan depends on your lender, the rules of your state, and your personal financial picture. If you are facing foreclosure, you should speak with an experienced lawyer to discuss your options and to determine what your best course of action is for dealing with the foreclosure.