Navigating how to sell a house when behind on payments can turn any household upside down. As real estate values rise – along with interest rates – keeping up with a monthly mortgage payment isn’t easy for homeowners. Oftentimes, it’s easier to stop paying the mortgage, sell the property, and move on. Homebuyers are getting faster at buying houses, making it easier for sellers to get out of tough situations. However, depending on how far behind the payments are, selling may not be an option.
Here, we review four actionable tips for homeowners to use while selling a house when behind on payments.
Avoid Fees and Penalties
Avoiding expensive late fees and penalties should be your top priority while preparing to sell your home when behind on mortgage payments. Play defense before playing offense in real estate! Defend your savings account by dodging late fees whenever possible.
Your mortgage company can slap multiple late fees to your name if you’re late on paying your home loan. Analyze your current timeline and what deadlines you are facing. All mortgage companies and lenders have different rules regarding loan delinquency. It’s common to pay multiple late fees as a penalty for being behind on your mortgage.
Map out upcoming deadlines. Put them in your calendar so that you know what mortgage late fees are coming before they hit. If there’s an opportunity to pay a small portion in order to postpone a late fee, consider taking it. This will give you extra time to sell your house when behind on payments.
Determine How to Sell Your House When Behind on Payments
There are several ways to sell a house when behind on mortgage payments. To figure out the best home-selling solution, determine how much your property is worth. Compare that to the total money left owed on your mortgage. That will provide you with clarity on how you can sell your house when behind on payments.
1. Short Sale
A short sale in real estate means that you are selling a property for less than what the mortgage is worth. For example, if you owe $800,000 on your mortgage but your property is only worth $750,000, that’s considered a short sale.
To perform a short sale, you must speak with your lender about it. Not all mortgage companies allow short sales. Also, some do but only at a certain price. Any proceeds from the sale get paid directly back to the lender.
Typically, a homeowner’s credit score will get negatively impacted by a short sale. This will make getting approved for a mortgage harder in the future. Try to avoid short sales when possible if you’re selling a house when behind on payments because of the negative effects that follow.
2. Sell Your House As-is
If your property value is close to the amount that you have left on your mortgage, consider selling it as-is. Even if you expect to take a small loss, the buyer may sometimes fill that gap and pay the difference. For homeowners that have to pay that difference themselves, it’s sometimes still worth avoiding a short sale and credit score hit.
Selling a house when behind on payments is easiest if you’re not underwater with your mortgage. Even if your home is worth $1,000 more than the loan owed on it, that will help. There are multiple ways to sell a home when behind on your payments.
Refer to your timeline and avoid mortgage forbearance when possible. If you’re only recently behind on mortgage payments, you will have more time. For other homeowners that are far behind on their mortgage, a quick home sale may be necessary. Trying to sell a house when behind on payments through a realtor might not be an option depending on your timeline.
Network with Local Homebuyers
Finding a local homebuyer is a great way to sell a home when behind on payments. Highlight the selling features of your property when networking with other real estate professionals. Solar panels and updated kitchens are important talking points to bring up. They add value to your home, even when you’re in a distressed financial situation. Maybe your property has a great location near a beach that tourists visit. Don’t be shy when talking up your property.
Selling a house when behind on payments is easy once you find the right buyer. Real estate investors will offer to purchase your house for cash and close quickly. Again, refer to your timeline! How soon do you need to sell your house before more late fees and loan forbearance hit?
Homebuyers can close within a few weeks. This is helpful when dealing with late mortgage payments. If your mortgage company is breathing down your neck, look for a selling option that provides the most ease to you and your family. You can get out of this tough situation by selling your home while being behind on payments to the right buyer.
Try to Renegotiate Your Loan
As a last-ditch effort, homeowners can attempt to renegotiate their home loans. Mortgage companies won’t always concede to requests regarding loan structuring. Lenders are less likely to be willing to lend to you since you were already late with your payments.
Without a good track record, homeowners will be hard-pressed to find a lender willing to restructure their loan. However, you don’t know until you ask! Try to renegotiate your mortgage with your lender. They may give you new terms with different interest rates. Mortgage repayment plans are oftentimes baked into restructured loans too.
Sell Your Home When Behind on Mortgage Payments Fast
Regardless of how you decide to sell your home when behind on mortgage payments, review your timeline. Determine how quickly you need to sell. If there are looming late fees approaching, avoid them when possible. Find a buyer that’s willing to take on your property. Selling a house when behind on payments is possible once you connect the dots.