Can I Still Sell My Phoenix Home If I Am Behind On My Mortgage Payments?

Phoenix is attracting many buyers and is emerging as a great marketplace for properties. However, there are times when someone misses out on their mortgage payments due to any number of reasons. If you are facing such similar conditions, the only bright light at the end of the tunnel is for you to sell your home. But the real deal is, can you? In short, yes you can. However, it depends on whether or not your lender has foreclosed on your home yet.

Foreclosure is a process that starts the moment you miss out on a mortgage payment. After one or multiple mortgage payment delays and 120 days, your lender has the legal authority to reclaim your property and sell it to recover their money. And while all this chaos isn’t enough, you will also be forced to vacate your home. Additionally, a foreclosure dents your credit score by almost 300 points or even more in certain cases. This makes it hard for you to obtain a credit card or auto loan, and might also keep you from being able to qualify for other mortgages.

However, you have the time before foreclosure happens to sell your home and be done with it. That doesn’t make the process easy though, but it is the best way out. From here, things can go two ways. First, when your house worth is more than the mortgage amount, and second when it is lesser than the amount you owe to your lender.

The First Option

If the worth of your home is more than your home loan amount, you can sell your home and use the profit amount to pay your lender back. The steps involved in this process are normal and usually, look like a regular home selling deal. You have to find an agent, finalize on a deal, close any gaps and contingencies, and eventually sell your home. If you choose to go through this route, you do not need the permission of your lender to sell your home. Considering the current trend of the US property market where the prices are soaring, selling your home at a higher price tag is possible. However, it depends on the type of property you own and the mortgage history.

The Second Option

The most tiring part is when the price of your home is less than your home loan amount. In this option, you have to sell your property as a short sale to avoid getting any foreclosures. The only catch is that your bank has to be notified and has to be on board with you during this whole transaction.

But what exactly is a short sale?

When the bid you get on your home is so low that it won’t cover your mortgage amount, you would end up being short on paying your lender. Now, this is acceptable only if your lender or bank has agreed to accept less than the amount you owe. However, taking your bank’s yes can be difficult as with short sales, lenders tend to lose money. And since no one likes accepting less than what they have lent, having these transactions approved can be difficult.

Although it’s not always the case. Sometimes, lenders actually prefer going for short sales over foreclosure and repossessing homes. This is partly because possessing a home and worrying about selling it is yet another daunting task. Lenders tend to avoid this and prefer a short sale to be just done with it. However, be ready to tackle a lot of paperwork to make this happen.

First off, your bank will need an offer letter and a hardship letter where you are required to explain why you can no longer pay your mortgages. To back your claims, you will also need to provide financial documents such as medical bills and income statements. Further, most lenders will cross-check to verify that the offer you have received for your property is fair. If all ends meet, they may allow the transaction to proceed. But you see, that may is where the difference lies.

Lenders can agree to a short sale, but there may be stipulations. They tend to counter the short sale offer with demands that can give them an upper hand. For example, lenders may say that they are ready to accept the offer, but all the extra expenses such as notary fees, repairs, etc., are to be borne by you. It depends on you whether you want to accept it, however, a real estate agent can offer a helping hand here. They can negotiate with the bank and help reach a point that is beneficial for you as well.

So, as a home seller, experiencing foreclosure is much worse than a short sale. In the latter, you experience way less damage to your credit score than the former. This will help you in the long run in a variety of things. Also, choosing a short sale will help you avoid the shame of having your home snatched away by the bank.

Final Takeaways

If you have missed your mortgage payments, and want to sell your home, the above-mentioned strategies can help you. However, there are also ways in which you can stay in your home and ask the lender to offer a helping hand. One such concept is mortgage forbearance where the bank gives you a temporary break from paying your mortgages. It’s a short grace period offered by your servicer and is the best way to deal with temporary payment delays.

Alternatively, you can also initiate a loan modification with your bank. In this strategy, the bank allows you to change the terms of your loan and modify the monthly amount. However, this doesn’t allow you to walk away free because the skipped payments are later added to the principal amount of your loan. Meaning, you would have to pay more later.

If you are looking to sell your home fast and hassle-free, contact us and we will offer the best services we have in-house.