A pre-foreclosure sale is when the lender allows you to avoid foreclosure by selling your home for less than the outstanding balance of the loan.

Such a move will allow you to keep some of your equity and minimize the damage to your financial well-being.

In pre-foreclosure deals, you work directly with a prospective buyer after you fall behind with your mortgage payments and a Lis Pendens is filed.

Lis Pendens is one of those latin legalese terms that means a notice has been recorded in the official records to show that an action affecting your particular property has been filed in court.

Every party can benefit from a pre-foreclosure sale. The lender retains a good loan, the homebuyer can save some money, and you protect your credit rating while collecting some of your equity.