Home Seller 101: Can I Sell My House If I’m Behind on Mortgage Payments?
Disclaimer: Beachworks LLC is a real estate investment company in Seattle. The following article is meant to be informational only and is not meant to be taken as legal advice.
It can happen to anyone. If you’ve suffered a job loss or a major medical event, you can quickly find yourself falling behind on your bills. Fall behind on your mortgage, and your property can quickly go into foreclosure. You might be thinking that selling your house is your only solution to catch up. Can you sell your house In this situation? The answer is yes—if you’re not officially in foreclosure yet.
According to the Consumer Financial Protection Bureau, you usually have 120 days before a lender can start the foreclosure process against you. If you are behind on your mortgage payments, it’s important to act quickly because you could be missing out on the opportunity to re-work your loan with your lender. You can talk to a government housing counselor to find out what your options are. It may be possible to work out an alternative payment plan or get a mortgage forbearance.
A foreclosure is reported on your credit report and can drop your credit score significantly. This will impact your ability to qualify for another mortgage for years down the road.
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Can I Sell My House?
If you have just fallen behind on your mortgage payments and don’t have a way to make those payments for the foreseeable future, you may be able to sell your house quickly to get out of a pickle. In the current climate of the US housing market—and especially in Seattle where housing prices have gone up significantly in recent years—your house may be worth more than what you owe on the mortgage. However, this will depend on your individual situation and mortgage/refinance history. If your house is worth more than what you owe on the mortgage then you can sell it and use the profits to pay back the lender.
When selling property the traditional way, the escrow company will get a payoff amount from your lender and pay off the any existing mortgages at closing. This process looks largely the same when selling a house that is behind on payments—you will owe your lender what’s left on the mortgage plus any missed payments, interest and penalties.
In the event that your mortgage is more than what you could sell your house for, you may have to do a short sale, (a transaction in which your lender allows you to sell the house for less than what you owe on your mortgage). Lenders are not always eager to approve these kinds of transactions, but it is preferable to going through the foreclosure process.
What If My House Won’t Sell?
When it comes to selling your house, you have options. You can list your home and put it on the market, but don’t necessarily have to go that route. If your house is not in great shape and you don’t have money to fix it up, you may be worried that it would sit on the market for a long time without selling. If that’s the case you can contact a local real estate investor to see if they will purchase your home as is. At times this may be a faster and more flexible solution for all parties involved.
Beachworks LLC local, family-owned company in north Seattle committed to improving the value of our community. For those who need to sell their homes quickly and privately, we we provide an all cash offer and close on your timeline.