Your Guide to Selling Your House if You’re Behind on Mortgage Payments

Can I Sell My House If I'm Behind On Payments

“Can I sell my house if I’m behind on payments?” It’s a question that many homeowners facing financial difficulties ask themselves.

Owning a home is a significant milestone for many, but financial struggles can turn this dream into a burden. If you find yourself on a mortgage missed payment, it might seem like there’s no way out. But, there are steps you can take to manage the situation and find relief. 

This guide will provide you with practical information to help you navigate selling your house when you’re behind on mortgage payments.

Selling Your House if You’re Behind On Your Mortgage Payments

Falling behind on mortgage payments can be stressful, but you’re not alone. 

Selling a house can be a viable option to avoid foreclosure and get a fresh start. The legal process may seem daunting, but with the right knowledge and resources, you can turn things around.

First, understand that you have options. You can sell a house traditionally through a real estate agent, sell it as-is to a cash buyer, or consider a short sale if your home’s value has decreased. 

Each option has its pros and cons, and the best choice depends on your unique situation.

Definitions of Above Water and Below Water

Before diving into the specifics, it’s important to understand the terms “above water” and “below water” as they pertain to your mortgage.

Above Water

When your home’s current market value is higher than the amount you owe on your mortgage. This means you have equity in your home, which is beneficial if you decide to sell.

Below Water

When your home’s local market value is less than the amount you owe on your mortgage. This situation is also known as being “underwater” or “upside-down” on your mortgage. Selling an underwater home can be more challenging, but it’s not impossible.

Knowing whether your home is above or below water will help you determine your next steps and the best strategy for selling your property.

Alternatives to Selling Your Home When Under Water

If your home is underwater, selling might seem like the only option, but there are alternatives worth considering if you want to avoid having your house in foreclosure or in the pre foreclosure process.

Pre Foreclosure Options:

Loan Modification

Contact your mortgage lender to discuss options for paying missed payments through a loan modification. It can involve changing your loan terms to make payments more manageable, such as extending the loan term or reducing the interest rate.

Forbearance

Forbearance enables you to temporarily reduce or pause your mortgage payments. It can give you time to improve your financial hardship without the immediate pressure of selling your home.

Additionally, your mortgage lender might offer a repayment plan as part of the forbearance agreement.

Refinancing

Refinancing entails obtaining a new loan to settle your current mortgage. If you can secure a lower interest rate or better terms, this might help you keep your home and manage payments better.

Renting Out Your Home

If you can move in with family or find a cheaper place to live, renting out your home can provide income to cover mortgage payments and prevent foreclosure.

Before proceeding with this option, make sure to understand your state’s foreclosure laws and regulations regarding renting out properties.

Always explore these options before deciding to potentially sell your home. Also, if your home is sold through foreclosure and the proceeds don’t cover the full mortgage debt, you may face a deficiency judgment.

Is It a Good Idea To Sell Your Home If You’re Behind on Mortgage Payments?

Deciding to sell your home when you’re behind on mortgage payments is a significant decision.

Pros:

  • Avoiding Foreclosure Sale: Selling your home can help you avoid the long-term negative impact of a foreclosure auction on your credit report score and financial health.
  • Debt Relief: Selling can provide the funds needed to pay off your mortgage and possibly other debts you owe money on, allowing you to start fresh.
  • Simplified Finances: Without the burden of mortgage payments, you can focus on rebuilding your financial stability.

Cons:

  • Loss of Home: Selling means you will have to find a new place to live, which can be disruptive and emotional.
  • Potential Financial Loss: If your home is underwater, you might not get enough from the actual sale to cover your mortgage, leading to financial loss.

Consider selling your home directly to a real estate investor who can provide a quick sale solution. 

If selling helps you achieve stability and avoid foreclosure, it could be the right move. However, if you can manage your mortgage through other means, you might prefer to keep your home.

Your Guide to Selling Your House if You're Behind on Mortgage Payments

How to Sell Your House If You’re Behind On Your Mortgage

If selling is the best option for you, follow these steps to ensure a smooth legal process:

Contact Your Mortgage Company

The initial step is to tell your lender that you want to sell. Open communication with your lender can lead to potential solutions that might make the process easier. 

For instance, they might offer a forbearance agreement or a loan modification to give you more time to sell. 

If your home is underwater (you owe more than it’s worth), may lender agrees to a short sale, allowing you to sell the property for less than the outstanding mortgage balance without facing foreclosure.

It’s crucial to act sooner during the pre-foreclosure period to explore all available options and avoid the more severe consequences of foreclosure.

Assess Your Home’s Value

Understanding your home’s market value is essential. You can get this through a professional appraisal or a comparative market analysis (CMA). 

A professional appraiser will give you an accurate value based on a detailed inspection and market conditions. 

Alternatively, a real estate agent can provide a CMA by comparing your house to similar properties that have recently sold or are on the real estate market. This information helps you set a realistic asking price.

By utilizing online tools, you can gain a better understanding of your home’s value.

Choose the Right Selling Method

Choosing how to sell your house depends on your financial situation, the home’s condition, and how quickly you need to sell.

  • Traditional Home Sale: Selling through a real estate agent might get you the highest price, but it could take longer. An agent handles marketing, showings, and negotiations.
  • Cash Home Buyers: Alternatively, you can consider selling to cash home buyers. This method is faster and ideal if you need to sell quickly or your house needs significant repairs. With a cash offer, you can avoid the delays and uncertainties associated with traditional financing.
  • Short Sale: If your home is underwater, a short sales might be the best option. This means selling your home for less than what you owe with the lender’s approval. Although it can be lengthy and involves negotiation, it helps you avoid foreclosure and its severe impact on your credit score.

Prepare Your Home

Begin by addressing any necessary repairs and maintenance tasks, such as fixing plumbing leaks, repairing roof damage, or resolving electrical issues to ensure that everything functions properly. 

Also, consider making cosmetic upgrades like painting walls, updating light fixtures, and enhancing landscaping to improve your home’s overall appearance without incurring significant costs. 

Decluttering your space and removing personal items can create a clean and inviting atmosphere for potential buyers. 

Lastly, stage your house for sale to showcase its full potential. A well-staged home can leave a lasting impression and increase the likelihood of a successful sale. 

Market Your Home

Effective marketing is key to attracting home buyers. If you work with a real estate agent, they will handle most of the marketing. Strategies include:

  • Professional Photography: High-quality photos make a big difference in how your listing looks online.
  • Online Listings: Make sure that you list your home on major real estate websites and social media platforms.
  • Open Houses and Showings: Hosting open houses and private showings lets potential buyers see your home in person.

Negotiate Offers

When you get offers, it’s essential to evaluate them carefully to ensure you’re getting a legitimate offer that aligns with your goals and financial needs. 

Consider the price and the terms and contingencies.

Close the Sale

Once you accept an offer, work with your agent and lender to complete the necessary paperwork and close the sale. Make sure to settle your mortgage and any other outstanding debts related to the property.

Selling your home while having missed mortgage payments requires careful planning and execution. 

Conclusion

Facing financial difficulties and falling behind on mortgage monthly payments is challenging, especially for a Texas homeowner. 

However, selling your home can provide the necessary sale proceeds to help you regain control of your finances. It includes selling your home to avoid default or foreclosure lawsuit.

Selling your home might be the best path to avoid foreclosure and start anew, making it a crucial property deal. 

At Four 19 Properties, we understand the struggles of dealing with problem properties and are here to help you through every step. 

Don’t let financial stress overwhelm you. Contact us today and take the first step towards a brighter, more secure tomorrow. We buy houses in Dallas and sell your house in Fort Worth.

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