Selling A House When You can't afford it and Behind On Payments – Avoiding Foreclosure
If you are a homeowner in Harford County, MD ad surrounding areas who is interested in selling your house to avoid foreclosure, you have a number of options available. Regardless of whether you want to sell the house or try keep it prior to a pending foreclosure auction, there’s one thing that’s certain: you need to act quickly before it is too late.
Option 1: Loan Modification
If you’re facing a foreclosure and want to keep the house, the first and best thing you should do is contact your mortgage lender about a potential loan modification. As a homeowner in Harford County, MD and surrounding areas, if you are at risk for foreclosure, you are covered by protections from the Consumer Financial Protection Bureau (CFPB). These rules are in place to protect you as a mortgage borrower from costly surprises and runarounds by your lender.
You should consider a load modification if you have stable income and can afford the mortgage payments with a lower interest rate. If this is the route you decide to go, you need to contact your bank or a mortgage servicer and see if they are willing to do some sort of modification. The servicer or the bank will usually require a ‘proof of hardship,’ which demonstrates why you are unable to make mortgage payments. If the modification is approved, you’ll typically be put on a trial period of 90 days or more. This means they will allow you to make three payments at the lower rate. If you are able to pay on time, they will finalize the loan modification.
It’s important to note that the negotiation process can be lengthy, and often frustrating at times. In fact, it’s not uncommon for banks and servicers to lose paperwork and give you the runaround, so be prepared for this.
Option 2: Sell Your Home
If you find that a loan modification isn’t going to work, or you otherwise decide to sell your house, there are a number of ways you can do so:
In the typical fashion – on the market with a Realtor or For Sale By Owner
By selling to a real estate investor like Easy Outs Homes
Important consideration when thinking about selling your house as a means to avoid foreclosure, is If you owe more than what you can sell the house for, the only way you can sell the house will be by ‘selling it short’- more commonly known as a short sale.
Selling Your Home Using a Short Sale
If you are underwater on your home mortgage – meaning you owe more on your mortgage than what the house is currently worth – then the only way you will be able to sell the house is through a short sale. A short sale is when your mortgage lender accepts a sales price on your home that’s lower that what you actually owe. This options gives you a way out of your mortgage and in many cases, you won’t be required to pay back the outstanding balance. This means that in a short sale, all debts can be settled or re-negotiated.
If you want to attempt a short sale in Harford County, MD and surrounding areas, you need to understand several key things:
Not all mortgage lenders will agree to pay off the balance of your loan. That means you have to make sure that there is a solid commitment between you and the lender before making a deal. Otherwise you’ll find yourself in a situation where you’ve sold your home and still owe the remaining balance.
Going through a short sale will negatively affect your credit score, so it’s best to have other housing lined up before it’s complete. Otherwise, your credit scores might drop to a point where it’s difficult to obtain financing on another house, or even rent an apartment.
On the bright side, if you go for a short sale, you may qualify for generous government cash incentives to help with your relocation. If you meet the requirements of the Home Affordable Foreclosure Alternatives (HAFA), you may receive a “relocation assistance” of up to $10,000 when your short sale closes.
Selling Your Home to a Real Estate Investor
If you are unable to modify your loan and you don’t want to go through a short sale, you have a third option with is to sell your house to a real estate investor. In many cases, real estate investors offer cash and are able to close the sale within weeks, saving you from the detrimental effects that a foreclosure would have. The nice thing about going down this path is that you don’t have to prepare your house for the market, find a realtor, and deal with all the hassle of selling your house. You’ll simply work with an investor who offers a fair price and break out of a mortgage contract in the blink of an eye.
Time Is of the Essence
The foreclosure process takes many months, and you’ll have ample notice from your lender that you are behind on payments, as well as what action will be taken. It’s important not to stick your head in the sand, and to address the situation immediately instead of kicking the can down the road. If you realize that you are probably going to wind up in foreclosure in Harford County, MD and nearby, the best thing to do is know all your options and act strategically to avoid the house being sold at the sheriff’s sale, which is the absolute worst option at your disposal.
Many homeowners who are facing foreclosure often accept it for what it is and lose their homes as a result. But this doesn’t need to be you. There are ALWAYS options available – and these options are almost always better than accepting a foreclosure. If you’re facing a foreclosure and want to bring resolution to the situation as quickly as possible, contact us today! We have experience handling short sale process and can save your credit by avoiding foreclosure, so you can move on with your life.