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Anyone can fall behind in their mortgage payments. Illness, divorce, job loss – whatever the reason, you quickly find yourself falling behind on bills, and debt grows. If you fall behind in paying your mortgage and fail to take action, you risk foreclosure.
Foreclosure has its consequences, including a deficiency balance, tax implications, difficulty buying another house (or renting), and a big hit to your credit score. Depending on where you live, you may have 120 days before your property is foreclosed.
Often the best way to avoid foreclosure and save yourself a lot of time and stress is to sell your property and pay back what you owe the lender. But selling your house fast takes work and finding a willing buyer.
How to Sell Your House if You’re Behind on Mortgage Payments?
To avoid losing your house, you can try consolidating or refinancing your loan or entering a forbearance agreement with the lender, but a lot of homeowners sell when they see no way to pay what they owe fast enough.
Step 1: Talk with Your Lender
Your lender needs to be informed of your decision to sell and why. They may be able to help you by giving you an extension, giving you more time to find a buyer. However, whether you can sell or not will depend on how much the house is worth versus how much you owe.
If you are not underwater yet, and your property is worth more than what you owe, you can sell and pay back the lender. Easy and straightforward.
BUT, if your house is worth less than the outstanding mortgage payment, you’ll need to do a short sale. The catch is your bank has to agree with the terms of the sale.
Step 2: Do Your Research
To find a buyer fast, you need to know your market. Gather all the information you need to know how to get their attention and negotiate a quick deal.
Step 3: Find a Realtor You Can Trust
Unless you are confident you can sell FSBO in a number of days, you’re going to need help. Find yourself a good real estate agent you can trust to help you navigate the market and negotiate a good deal.
Step 4: Make the Property (and Sale) More Appealing
As you may know, traditional buyers tend to request repairs or a reduction in your asking price. Chances are, if you are behind in payments, you cannot spare the money (or time) for repairs. So what are your options?
You can give the house a facelift: painting, cleaning, and improving curb appeal are a few things you can do. BUT you can always offer financial incentives to inspire confidence in buyers and satisfaction with the sale.
Step 5: Sign Paperwork, Close, and Pay What You Owe
Speaking through your agent, negotiate the terms of sale quickly, sign the necessary paperwork, and get it expedited.
You should keep your lender informed throughout the sale and notify them of closing day. Once you have the proceeds from sale, pay off what you owe the lender fast, so you can walk away without further complications.
What If I Can’t Sell My House?
If you’re worried you cannot sell, and time is running out, the best thing you can do is sell to a real estate investor. Why? Because investors pay cash for properties “as-is.” No repairs, no cleanings, no traditional sale warranties or inspections, and no lengthy mortgage approvals. It’s a fast, easy transaction.
You enjoy a quick closing, on a day of your choosing, and can pay back the lender what you owe in cash. This way, you avoid the repercussions of foreclosure, giving you a better chance of buying another property and saving your credit score.