With the cost of living today, it doesn’t take much for the average family to get behind on their mortgages through no fault of their own. Even if you are employed, watching debt build up due to unexpected costs such as car repairs, having to replace new appliances, or a leaky roof can find your budget stretched at the end of the month.
If this happens over a period of time, the next thing you know you’re behind on your mortgage payments and you’re getting calls and notices from the lender. It’s easy to panic when this happens, with fears you could lose the home you’ve worked so hard to own. If you are wondering, can I sell my home if I am behind on payments? The answer is yes, as long as you act before the lender begins the foreclosure process.
Can I Sell My Sacramento House if I’m Behind on My Loan Payments?
What is Foreclosure?
Lenders foreclose on properties when the homeowners consistently miss mortgage payments. Most lenders will take note of the first missed payment and begin the process by sending out a warning notice. If you fall behind by over 120 days, lenders have the right to reclaim your home. You will be required to vacate your home and they will sell your property to get their money back. Adding insult to injury, a foreclosure also acts as a black mark on your credit report that can lead to further financial challenges for you.
This includes not being able to get future mortgages, credit cards, lines of credit, auto loans or even a cell phone plan in some cases. However, if you know you’ve been late in payments, you do have the option to put your home up for sale. This leaves you open to further issues if the equity in your home is not enough to pay the bank the balance owed on your mortgage.
When your home is worth less than the value of your mortgage this is called “being underwater.” If you are behind on your mortgage payments and on top of that, the value of your home has dropped below the price you paid for it, you can’t sell, as the proceeds from the sale won’t cover your mortgage.
The reason owners choose to sell when the threat of foreclosure is imminent is to use the profits of the home sale to pay the bank the money owed. Your first step, therefore, would be to speak to a real estate agent to assess your home and let you know how much you can realistically expect to get when you sell. If they find your home is worth less than what is owed on your mortgage, your only choice is a “short sale.”
What is a Short Sale?
Short sales are usually the options homeowners consider when trying to avoid foreclosure. The problem with a short sale is that you need to work with the bank to do so. This is because, with a short sale, you are literally “short” on the amount owed on the home. So, before you decide on a short sale you have to first submit paperwork to your bank to request a short sale option.
A short sale requires proof of financial hardship, with a letter outlining why you are forced to sell your home under the current market conditions. The good news in this situation is that banks often prefer the short sale option to foreclosure. Lenders really don’t want to have to worry about repossessing and selling your home. For a short sale, you are the one going through the sales process that saves them money in the long run.
Along with your letter of hardship, you can also include financial proof of your difficulties such as income statements, medical bills that are interfering with your ability to pay your mortgage, proof of loss of income, etc. The bank will send someone out to assess the home to determine the value. They want to confirm any offers you receive are reasonable based on fair market value.
Pros and Cons of Short Sales
The issue here is that many buyers are not so keen on short sales. While some flock to them thinking they’ll get a deal on a home, there are so many conditions and stipulations when buying a short sale that they might get spooked. For example, because banks want to get as much money as possible, they might have unreasonable conditions, and can also hold up transactions for months on end. Your real estate agent will assist in negotiating these details, but it really can lead to issues finding a buyer willing to jump through the hoops.
As-Is Cash Investors
Another option is to speak to a cash investor like Property Sales Group. We specialize in offering homeowners a fair price that will help you find the money needed to pay your mortgage. For as is investors, waiting out the whole lender process is not as difficult as it is for homebuyers. We are happy to complete the process and allow sellers to stay in the home until all the red tape is taken care of.
Companies that buy houses for cash simplify the process for you. Your credit is protected, and we work with you to find a convenient time to vacate the home by closing the sale suited to your schedule. We are very fair with the offers we make so that you maintain more equity in the home. This is often the best option, so we always advise people facing potential foreclosure to speak to cash investors like us before going the short sale route.
You can consider both options and choose the one that will allow you to pay off your mortgage, potentially have cash from the sale and avoid seeing your credit suffer. We consider the personal element of the sale and work with our clients to find mutually beneficial agreements. It is a win-win solution that takes the pressure off. You don’t face losing your home and can still come out of the situation relatively unscathed.
If you are behind on your mortgage payments but still want to sell your home in the Sacramento area, give us a call today at 916-990-7374. We empathize with your situation and can help you navigate the process for the best possible outcome.